History of
Cryptocurrencies
From the era of barter economy, metal and coins to gold
and silver, continuing to the modern monetary systems and checks, and ending
with the latest developments in the global currency, such as the introduction
of cryptocurrency like Bitcoin, have passed centuries. Each type of money plays
a crucial role in transactional activities in some period of time. As human
society and markets developed in particular, there was a need for more
sophisticated instruments for the exchange of goods. In this regard, the
introduction of cryptocurrency revolutionized the international payment system
in a size that only a few years ago was unimaginable. The cryptocurrency is a
digital or virtual currency that uses cryptography for security. Cryptocurrency
is hard to forge because of this security feature. The determining
characteristic of cryptocurrency, and probably the most attractive, is its
organic nature as the fact that it is not issued by any central authority.
Cryptocurrencies have their own advantages and disadvantages. The main benefits
of using cryptocurrencies are that they transfer the funds more easily between
two parties in the transaction. These transactions are facilitated through the
use of public and private keys for security purposes. These fund transfers are
carried out with minimal processing costs, allowing users to avoid the large
fees for online transactions charged by most banks. (Vigna, Paul; Casey,
Michael J. (2015).
The Age of Cryptocurrency: When the trading price of
two cryptocurrencies, Bitcoin and Ethereum, rocketed to the stratosphere in
2017, the term cryptocurrency rose to global popularity. It soon became part of
the world’s vocabulary when The Major risks for investing in cryptocurrencies
that need to be considered in the medium and long term. Market Basics
Cryptocurrencies It’s been called one of the “great technological breakthroughs
since the Internet” (Reuter News, 2014). In its brief history, crypto has had a
significant reach across the financial world.
This article briefly compares traditional currency and
cryptocurrency and outlines the differences between these two mediums of
exchange. Cryptocurrency is becoming better-known and more popular throughout
the entire world. However, being relatively new, you may not be familiar with
it or why it’s even a big deal. It’s time to learn how cryptocurrency will make
the world a better place.
The development of CCs (and all digital financial
assets) has been the subject of many reports in recent years. Interest in these
assets is not new. While the first CCs were developed after the GFC in 2008,
the Covid-19 crisis gave them a spectacular boost (Bitcoin saw its value
multiply by more than seven times in one year).
Challenges of
Cryptocurrencies
Major risks for investing in cryptocurrencies that
need to be considered in the medium and long term. Cryptocurrencies have also
given rise to a new set of challenges for governments to contend with. The
anonymity and portability of cryptocurrencies make them appealing to bad actors
such as criminal groups, terrorist organizations, and rogue states. There are
also uncertainties about the regulatory treatment of emerging financial
technologies. In addition, crypto mining can require enormous amounts of
electricity, which has led to concerns about its environmental effects.
Meanwhile, the rise of DeFi and crypto payments has raised questions about
consumer protection, market volatility, and the ability of central banks to
carry out monetary policy.
From here we will conclude what are the advantages of
the cryptocurrencies: Much has changed in the last several years for
cryptocurrencies, including a growing awareness by institutional brokers,
regulators, and currency traders. The latter has a particular interest in
promoting cryptocurrency trading due to the expected growth of the market and
potential profits. While broad acceptance remains small, more examples arise of
vendors and even countries announcing they would be accepting Bitcoin
transactions.
Bitcoin and other prominent cryptocurrencies have
gained much attention since the last several years. Globally known as digital
coin and virtual currency, this cryptocurrency is gained and traded within the
blockchain system. The blockchain technology adopted in using the
cryptocurrency has raised the eyebrows within the banking sector, government,
stakeholders and individual investors. The rise of the cryptocurrency within
this decade since the inception of Bitcoin in 2009 has taken the market by
storm. Cryptocurrency is anticipated as the future currency that might replace
the current paper currency worldwide. Even though the interest has caught the
attention of users, many are not aware of its opportunities, drawbacks and
challenges for the future. Researches on cryptocurrencies are still lacking and
still at its infancy stage. In providing substantial guide and view to the
academic field and users, we are discussing the opportunities in the
cryptocurrency such as the security of its technology, low transaction cost and
high investment return. We are also discussing within law and regulation, high energy consumption, possibility of crash and
bubble, and attacks on network. The future undertakings of cryptocurrency and
its application will be systematically reviewed.
It is undeniable that the emergence of cryptocurrency
will play a significant role in the world’s economic fabric. It is the fact
that every economist, researchers, investors alike has to act and considerable
measures to strengthen their knowledge on the blockchain technology in general
(Fauzi et al., 2019; Fauzi et al., 2018a).
As cryptocurrency has not yet reached maturity in term
of time frame, further studies on its technology, potential and risk should be
studied to ensure that the opportunities are not just a mere fluke. Also, the
upcoming challenges do not mitigate stakeholders into the doldrums of financial
failures.
Cryptocurrencies are here to stay. The future of
trading lies well with new emerging technologies that are able to benefit
mankind. Needless to say that, users and industry player can evaluate whether
cryptocurrency can benefit or harm them, in accordance with their objectives
and perspectives in owning it. This article has reviewed the opportunities in
cryptocurrency in term of its security of its technology, low transaction cost
and high investment return. For the challenges, the discussion revolved around
law and regulation, high energy consumption, possibility of crash and bubble,
and attacks on network. The improvement and future work on cryptocurrency
include improving the security protocol, working on proof of activity, using
the byproduct of proof of work and applying the knowledge management system.
Looking at the positive outlook of the blockchain technology and the prospect
of government in regulating cryptocurrency, more in-depth studies on several
aspects of cryptocurrency should be done. Taking the opportunities from part of
the pie in the cryptocurrency and blockchain technology can be beneficial for
researchers. From then, application in using cryptocurrency in the best of its
ability would be one of the most prominent discoveries in the 21st century.
Future of
Cryptocurrencies
Whatever the future of cryptocurrency holds, there’s a
lot of work to be done to balance the risks with the rewards, and there’s a lot
of opportunity for the brands and individuals who take on the task. The
discussion is no longer one of whether cryptocurrency will survive, but rather
how it will evolve—and when it will reach maturity.
Perhaps in the future, cryptocurrencies will finally
be used for their creators' original intent: to pay for things. But before that
happens, the world will need to make extremely massive, sweeping adjustments
that will not be easy to pull off. A cryptocurrency is a digital currency that
is created and managed through the use of advanced encryption techniques known
as cryptography. Cryptocurrency made the leap from being an academic concept to
(virtual) reality with the creation of Bitcoin in 2009. While Bitcoin attracted
a growing following in subsequent years, it captured significant investor and
media attention in April 2013 when it peaked at a record $266 per Bitcoin after
surging 10-fold in the preceding two months. Bitcoin sported a market value of
over $2 billion at its peak, but a 50% plunge shortly thereafter sparked a
raging debate about the future of cryptocurrencies in general and Bitcoin in
particular. So, will these alternative currencies eventually supplant
conventional currencies and become as ubiquitous as dollars and euros someday?
Or are cryptocurrencies a passing fad that will flame out before long? The
answer lies with Bitcoin.
Some of the limitations that cryptocurrencies
presently face – such as the fact that one’s digital fortune can be erased by a
computer crash, or that a virtual vault may be ransacked by a hacker – may be
overcome in time through technological advances. What will be harder to
surmount is the basic paradox that bedevils cryptocurrencies – the more popular
they become, the more regulation and government scrutiny they are likely to
attract, which erodes the fundamental premise for their existence.
Crypto has always been volatile, both in price and in
consumers’ perception. Despite the explosion in recent years, what the future
of cryptocurrency holds is still unclear. For the average investor, for
government regulators, and for those attempting to make crypto greener, this is
a time of paradoxes to navigate. If one thing is certain, it’s that the market
in 5 years’ time could be just as unrecognizable to us now as the market was 5
years ago.
There is no assurance that persons and companies who
accept cryptocurrency as payment today will continue to do so in the future. As
such, this begs the question: will crypto replace cash or any other typical
currency? The answer isn't as straightforward as you think. Despite this,
there's little sign that investors or companies are backing down from the
potential reward crypto has to offer.
If you want to learn more about this topic, feel free to leave your valuable comments. We are happy to assist you.
All the best for your future.
(All the material in this article are only the views of
the author, and couldn’t be taken as “Financial Advice”)
Key Words: Evaluation of Cryptocurrency
Evolution of Cryptography
Evaluation of Cryptographic Algorithm
Evaluation of Cryptosystems
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