There has been a lot of hustle in the last couple of years regarding cryptocurrency. Crypto intrigued many people worldwide when Bitcoin, one of the cryptocurrency coins, gave more than 5x return in the year 2020.
In January 2020, the price of 1 BTC(bitcoin) was $6900. And currently, it is at $34,000. It touched its all-time high of $40,000 on January 9th, 2021.
To understand the rise and drop in the currency, lets first see what Crypto is actually.
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What is Cryptocurrency ?
Crypto is a globally present digital currency that can be used to buy goods and services worldwide. The best part about this currency is that it works on blockchain technology.
What is Blockchain technology?
Blockchain technology is a decentralized system of keeping a ledger. It means that all the transactions that take place are recorded in a network of computers located worldwide instead of one place. This is the major difference between the banking system and the crypto. Unlike banks, crypto transaction records cannot be stolen from 1 place.
The best part about this technology is the security it offers. As it is a decentralized system, there is no need for a mediator to help the transaction occur and not storing all the data in one place makes it more secure.
What is the aim of Cryptocurrency?
The aim of the cryptocurrency is to replace the current government issued currency all over the world.
When the inventor of Bitcoin, Satoshi Nakamoto, saw how much control a government had over the currency, he decided to find a way, so one person does not control it. And thus he invented the blockchain technology.
What has Cryptocurrency become?
People have started to use cryptocurrency as an asset rather than a currency.
The cryptocurrency aimed to become the currency of the world. But the way people are using cryptocurrency today is not the way it was meant to be used. There are currently 90 lakh investors in the world who invest in cryptocurrency. Yes, that is right, invest. People have started to use cryptocurrency as an asset rather than a currency. Due to constant fluctuation in prices of crypto, investors have taken it as a money-making opportunity.
Is Cryptocurrency illegal?
The legality of the cryptocurrency is a subjective question and totally depends on a country and its laws. In the United States, Cryptocurrency is legal and is treated and taxed as all the other forms of assets, just like in most developed countries like Japan, France, U.K.
China has banned the use of crypto in its country but investing, and trading of cryptocurrency is still allowed. India is yet to take a proper stand on cryptocurrencies, but it is illegal to use crypto coins for any transaction. Although investing and trading is still allowed but is not made explicitly legal.
As said earlier, Everyone is treating cryptocurrency as an asset rather than a currency.
What are the problems with Cryptocurrency?
Cryptocurrencies has many advantages through its technology, but there are some bad sides to it as well.
As mentioned before, crypto is being used as an asset rather than a currency; the major reason behind this is its price fluctuation. It is challenging to use a currency whose value changes significantly every day. Prices of commodities cannot be fixed as the currency’s price keeps fluctuating.
Another major issue is that it cannot be traced and is hence being used for illegal activities worldwide. There have been many kidnappers demanding ransom in the form of cryptocurrency as it is tough to trace.
What is cryptocurrency’s future?
Cryptocurrency is such technology which has passionate lovers and fiery haters as well. Warren Buffet, regarded as one of the world’s best investors, has called cryptocurrency a bubble that can burst anytime.
On the other hand, philanthropists like Bill Gates and Elon Musk have shown their full support to cryptocurrencies. They believe it is the future of currency and the blockchain technology on which it is based, is very useful and can be implemented in various sectors.
Cryptocurrency’s future seems bright as many of the worlds big investors have started to show their faith in this technology, and it seems that this will go a long way.