Understanding the Impact of Cryptocurrency
Over the last few years, the term cryptocurrency has rapidly gained visibility in the public eye. In today's day and age, cryptocurrency is fast becoming essential to people who value privacy, and for whom the idea of using cryptography to control the creation and distribution of money does not sound too far-fetched.
Today, cryptocurrency, led by Bitcoin, Litcoin, Ether, etc. are taking the financial world by storm as more people invest and buy these currencies. At the same time, there is still widespread confusion and bias which retracts for the overall effectiveness of Cryptocurrency. Educating users about such alternative forms of currency is extremely important given its volatile nature. In this article, we will try to provide a holistic outlook towards Cryptocurrency and how it's affecting the world we know today.
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What Is a Cryptocurrency?
Cryptocurrency is designed from the ground up to take advantage of the internet and how it works. Instead of relying on traditional financial institutions who verify and guarantee your transactions, cryptocurrency transactions are verified by the user's computers logged into the currency's network. Since the currency is protected and encrypted, it becomes impossible to increase the money supply over a predefined algorithmic rate. All users are aware of the algorithmic rate. Therefore, since each algorithm has a roof limit, no cryptocurrency can be produced or "mined" beyond that.
Since Cryptocurrency is completely in the cloud, it does not attain a physical form but have a digital value, and can be used for digital equivalent of cash in a steadily increasing number of retailers and other businesses. Bitcoin was the first cryptocurrency that was ever created, and while there is a small fee for every cryptocurrency transaction, it is still considerably lesser than the usual credit card processing fees.
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Bitcoin is the most popular cryptocurrency which has seen a massive success. There are other cryptocurrencies such as Ripple, Litecoin, Peercoin, etc. for people to transact in. But for every successful cryptocurrency, there are others which have died a slow death because no one bothered to use them, and a cryptocurrency is only as strong as its users. Some of the salient features of Cryptocurrency include -
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Cryptocurrency can be converted into other forms of currency and deposited into user's accounts at a lightning speed
Most Cryptocurrency can be transacted anonymously, and can be used as discreet online cash anywhere in the world. Users therefore do not have to pay for any currency conversion fees
While not 100% immune from theft, Cryptocurrency is generally safe to use and difficult for malicious hackers to break
Bitcoin and other Cryptocurrency can be saved offline either in a "paper" wallet or on a removable storage hard drive which can be disconnected from the internet when not in use
Bitcoin - A Glimpse into the Future
2016 was the year of Bitcoin, and saw this digital currency grow almost 79% as compared to Russia's Ruble and Brazil's Real, the world's foremost hard currencies. As a result, it emerged as a better bet for investors while beating foreign exchange trade, stock exchange trade, and commodity contracts. There are many reasons why the impact of Bitcoin is exceptionally relevant today, and why the Cryptocurrency of 2018 is now here to stay. These include -
Reduced Remittance
Reduced RemittanceMany governments around the world are implementing isolationist policies which restrict remittances made from other countries or vice versa either by making the charges too high or by writing new regulations. This fear of not being able to send money to family members and others is driving more people towards digital Cryptocurrency, chief amongst them being Bitcoin.
Control Over Capital
Control Over CapitalMany sovereign currencies and their usage outside of their home country are being regulated and restricted to an extent, thereby driving the demand for Bitcoin. For example, the Chinese government recently made it tougher for people as well as businesses to spend the nation's currency overseas, thereby trapping liquidity. As a result, options such as Bitcoin have gained immense popularity in China.
Better Acceptance
Better AcceptanceToday, more consumers are using Bitcoins than ever before, and that is because more legitimate businesses and companies have started accepting them as a form of payment. Today, online shoppers and investors are using bitcoins regularly, and 2016 saw 1.1 million bitcoin wallets being added and used.
Corruption Crackdown
Corruption CrackdownAlthough unfortunate, digital Cryptocurrency such as Bitcoin are now also seeing more usage because of the crackdown on corruption in many countries. Both India and Venezuela banned their highest denomination and still-circulating bank notes in order to make it tougher to pay bribes and make accumulated black money useless. But that also boosted the demand for Bitcoins in such countries, enabling them to send and receive cash without having to answer to the authorities.