Cryptocurrency: Fintech Disruptor

Blockchains, sidechains, mining – clandestine cryptocurrency terminologies keep piling up by the minute. While introducing new financial terms in a complicated financial world may seem counterintuitive, cryptocurrencies offer a vital solution to one of the biggest obstacles in today’s money market: the security of transactions in the digital world. Cryptocurrency is a defining and disruptive innovation in the fast-moving world of hi-tech, a fitting answer to the need for a secure means of exchange in an era of virtual transactions. In an age where demand is nothing but figures and numbers, cryptocurrency proposes to do just that!

In the most basic form of the term, cryptocurrency is a proof-of-concept alternative virtual currency that promises secure and anonymous transactions through a peer-to-peer network network. Misnomer is more of a property than an actual currency. Unlike everyday money, cryptocurrency models operate without a central authority, as a decentralized digital mechanism. In a distributed cryptocurrency mechanism, money is issued, managed and accepted by the community’s collective peer-to-peer network – known as its ongoing activity. mining on a peer’s machine. Successful miners also receive coins as a token of appreciation for their time and resources. After use, transaction information is transmitted to an online blockchain under a public key, preventing each coin from being spent twice by the same user. Blockchain can be thought of as a cash register. Coins are secured behind a password-protected digital wallet that impersonates the user.

The supply of coins in the world of digital currency is decided in advance, without manipulation, by any person, organization, government organization and financial institution. The cryptocurrency system is known for its speed, transaction activity on digital wallets can realize funds in minutes, compared to the traditional banking system. By design, it is largely irreversible, further reinforcing the idea of ‚Äč‚Äčanonymity and further eliminating the possibility of money being traced back to its original owner. Unfortunately, the outstanding features – speed, security and anonymity – have made cryptocurrencies a form of transaction for many illegal trades.

As in the real world money market, currency rates fluctuate in the digital coin ecosystem. Due to the limited number of coins, as the demand for the currency increases, the coins inflate in value. Bitcoin is the largest and most successful cryptocurrency to date, with a market cap of $15.3 billion, capturing 37.6% of the market and currently priced at $8,997.31. Bitcoin hit the currency market in December 2017 at $19,783.21 per coin before facing a sudden drop in 2018. The decline is partly due to the rise of alternative digital coins such as Ethereum, NPCcoin, Ripple, EOS, Litecoin and MintChip.

Because of the limits encoded in their supply, cryptocurrencies are believed to follow the same economic principles as gold – the price is determined by limited supply and fluctuations in demand. With constant fluctuations in exchange rates, their sustainability remains to be seen. As a result, investing in virtual currencies is currently more speculative than a daily money market.

In light of the industrial revolution, this digital currency is an essential part of technological disruption. From the perspective of a casual observer, this rise can be exciting, threatening, and mysterious all at once. While some economists remain skeptical, others see the cash industry revolution as a lightning bolt. Conservatively, digital currencies will displace roughly a quarter of developed countries’ national currencies by 2030. This has already created a new asset class alongside the traditional global economy and a whole new set of investment vehicles will emerge from crypto-finance in the coming years. Recently, Bitcoin may have gone down to focus on other cryptocurrencies. But this does not indicate a crash of the cryptocurrency itself. While some financial advisors emphasize the role of governments in suppressing the underground world by regulating the central government mechanism, others call for the continuation of the current free flow. The more popular cryptocurrencies become, the more control and regulation they attract – a common paradox that distorts the digital note and erodes the main purpose of its existence. Either way, the lack of intermediaries and oversight is making it incredibly attractive to investors and changing day-to-day trading dramatically. Even the International Monetary Fund (IMF) fears that cryptocurrencies will displace central banks and international banks in the near future. From 2030, conventional trade will be dominated by the crypto supply chain, which will offer less friction and more economic value between tech-savvy buyers and sellers.

If cryptocurrency is to become an essential part of the existing financial system, it will have to meet very different financial, regulatory and social criteria. It will need to be hacker-proof, consumer-friendly and highly secure to provide its core benefit to the mainstream monetary system. It should preserve the anonymity of users without being a means of money laundering, tax evasion and Internet fraud. As they are essential to the digital system, it will take a few more years to understand if cryptocurrency can compete with real-world currencies in full swing. As likely as not, the success (or lack thereof) of cryptocurrencies in meeting these challenges will determine the fortunes of the monetary system in the coming days.