All posts by Subham Sen

October 31, 2008, a pseudonym Satoshi Nakamoto suddenly published a white paper that detailed the foundation of the world’s first cryptocurrency Bitcoin. The paper was titled “Bitcoin: A peer-to-peer Electronic Cash System” and with this, the word Cryptocurrency took its first step in the market.

Blockchain and Cryptocurrency:

A cryptocurrency is an encrypted data string that denotes a unit of currency. A peer-to-peer network monitors and organizes a blockchain. It also serves as a secure ledger of transactions, e.g., buying, selling, and transferring. 

The first block, also known as the genesis block was mined in 2009. Bitcoin had a valuation of  $0.0008. Now as of today it has a trading value of $58000. It is a far cry from when it was created.

So how does its value turn into a skyrocket? Bitcoin functions on the Proof of Work system. Miners have to validate a block to receive bitcoin as a reward, which has certain difficulties. With time the difficulty to mine one block increased, resulting in a reduction in supply. But the demand kept growing which resulted in a skyrocket jump from <<$0.1 to $58000. But the crypto market was never limited to bitcoins only. The very next year cryptos like Litecoin, Namecoin were introduced to the market which serves to mine/validate blocks in different networks and transactions.

Pros & Cons of Cryptocurrency:

Now you may question, why bitcoin? Why other cryptos? The reward system could have been the legitimate non-volatile currencies, right?

Wrong! In this information age, where we are on the verge of cyberattacks, all the transactions in the network are not unnoticed by hackers. This was one of the reasons we needed to introduce this blockchain technology. 

Pros:

• As a reward, the miner is paid in crypto, so this way the blockchain owner does not have to know to whom the reward is paid, so no fear of information leakage. 
• Also, cryptocurrencies themselves are encrypted in code so no one can steal and no fraud can happen and most of all it is totally digital. 
• A major pro of cryptocurrencies is that they are mainly decentralized. Many cryptocurrencies are controlled by the developers using it and those who have a significant amount of the coin or by a corporation to develop it before it’s released into the market. 
• The decentralization helps keep the currency monopoly free and in restraint, so nobody organization can determine the flow and so the worth of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies which are controlled by the Government.

Cons:

• But with such pros, there are cons definitely. Many illegal businesses and activities on the dark web are taking place and the transactions there are made in crypto because it is untraceable and so criminals are using it as a mode of payment to keep on doing illegal activities. 
• Also, the crypto market is very volatile. One can not keep up when the trade value goes up and when goes down. 
• Also, the owner of the crypto has to keep it at his/her own risk, in case of any mishap if somebody loses the crypto, they cannot claim it back as this reward has no ownership and authority. 
• The crypto rewards are stored in a wallet, which can be a cloud or a physical-digital crypto wallet. 
• Also, some cryptocurrencies can only be traded in one or some fiat currencies. It forces the user to convert these currencies into one all told the most currencies, like Bitcoin or Ethereum first and then through other exchanges, to their desired currency. It can apply to just some cryptocurrencies. By doing this, the extra transaction fees are added within the method, costing unnecessary money which also affects the market value.

Cryptocurrency’s impact on the global market :

But with such cons the global crypto market capitalization hit the coveted $3 trillion mark. With this, the total value of cryptocurrencies was more than the GDP of nations like the United Kingdom, France, India, and Italy. 

However, it lagged countries like the United States, China, Japan, and Germany. This is an important milestone for the crypto industry and re-emphasizes investors’ trust in this potential of blockchain technology to disrupt the way digital natives interact with the internet. So, as of conclusion, despite being volatile, the crypto market is uprising rapidly with the increased blockchain difficulties and trading. 

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