When Bitcoin – the first and the largest cryptocurrency ever – was launched in 2009, it gained so much adversity among some writers and a section of the media. While some suggest that cryptocurrencies are the next big thing, some tout them as evil, trying to threaten the norm of financial services and transactions.
Since the world can remember, the advent of new technology has always been met with a skeptical mind by humanity. Cryptocurrencies are no exception. Irrespective of the increase in the demand for cryptocurrencies across the globe, many writers keep suggesting the end of Bitcoin and other cryptocurrencies. After all, these technologies keep challenging the social and political underpinnings of society.
To explain more about the crypto market, this article will provide a deep insight into its value, as well as its complex underlying technologies. Let’s dive in!
Cryptocurrencies have generated so much debate
Cryptocurrencies were originally thought to be safe havens for money launderers and criminals. However, over the past decade, the crypto market has come a long way to establish its standing in terms of popularity and adoption. The crypto market has been predicted to surpass the $3 trillion mark sometime in the future, having hit the $2 trillion thresholds in the past.
Now, there are tens of thousands of cryptocurrencies – including Bitcoin and TeslaCoin – available in the market. Their volatilities have raised so much attention about them. Some believe that they are a risky investment with an inevitable end while others believe that they are the currency for the future.
The underlying technology behind the security and decentralization of cryptocurrencies – the blockchain – has found so many applications across various industries, such as media and healthcare. For every suggestion about how bad cryptocurrencies are, there are various reasons why the wave of these digital currencies is a way of democratizing the financial sector.
Why Use Cryptocurrency?
Cryptocurrencies are digital assets that adopt cryptography to improve security and decentralization. Cryptocurrencies have given investors and enthusiasts more options to trade successfully without control by any central authority, including the government.
When investors trade crypto, they can enjoy a high level of anonymity. This implies that while all transactions are recorded on the public ledger for transparency, the details of the transaction are kept from the public. This provides a form of anonymity.
Many crypto exchanges allow users to carry out transactions without providing their personal details. However, law enforcement agencies are concerned about the possibility of transactions not being able to be traced back to an entity. Yet, in spite of the concerns of identity theft, cryptocurrencies can offer a great advantage for users.
Various groundbreaking technologies have contributed to the popularity and security upsides of cryptocurrencies. Some of these are introduced below:
Bitcoin and other cryptocurrencies are built on blockchain technology. All transactions are recorded on this public ledger, in the form of blocks, to promote transparency and security. Since it was first launched for crypto use, blockchain technology has experienced various applications in different fields. With Blockchain, parties in a transaction can interact directly without third parties.
These digital wallets can help in storing and receiving cryptocurrencies. Wallets can either be software or hardware. Crypto Wallets often involve a key pair – one private and another public. The former serves as a digital signature that confirms the consent of the user to send cryptocurrencies.
Mining is a process that involves the verification of blocks of transactions, as well as the generation of new digital currencies. This process promotes the security and decentralization of cryptocurrencies. To address the high cost of mining, these individuals – called miners – often pool their resources together to increase the likelihood of finding and adding blocks of transactions to the blockchain.
The crypto industry is on the rise. It is a new technology that has taken the world by storm. However, as relatively new investments, cryptocurrencies are characterized by high volatility. The underlying principles and technologies behind cryptocurrencies are what make these digital currencies popular and secure.