The use of cryptocurrency is on a rapid rise. If recent stats are to be believed, Bitcoin, a form of cryptocurrency, accounts for more than $6 billion worth of daily transactions. Not only this, but the global blockchain market size is expected to exceed $57 million by 2025.
All these stats suggest a positive trend towards a brighter future for cryptocurrency. So, will cryptocurrency become a new trend in the future? Let’s find out! But before we delve deeper, let’s understand what a cryptocurrency is.
What is Cryptocurrency?
In simple words, a cryptocurrency is a virtual or digital currency that is designed to work as a medium of exchange. Being based on blockchain, it is a decentralized currency that makes use of cryptography technology for security and verification purposes. What this means is that the cryptocurrency is not regulated by any central authority. This makes them relatively immune to government control and interference.
Since cryptocurrencies are virtual by nature, they can be exchanged between two parties with the help of public and private keys. Bitcoin is one such cryptocurrency.
Bitcoin may often be referred to as anonymous money. It is the most popular cryptocurrency that came into being in January 2009. Reportedly, this digital currency was developed by Satoshi Nakamoto. What makes Bitcoin different from the paper currency is the fact that it extensively uses cryptography and relies on a peer-to-peer network.
A number of Bitcoin alternatives have popped up into the market. These include the likes of Ethereum, Stellar, NEO, DAVX, Zcash, and the like. All these virtual currencies make use of a digital database and guarantee the utmost security and confidentiality. So, here is an important question – how do cryptocurrencies work? Let’s find out.
How Does Cryptocurrency Work?
Cryptocurrency uses a highly-secure system based on blockchain such that every transaction is recorded on this digital database. This nature of cryptocurrency makes it immutable. Since all the records can be accessed by the involved parties, it ensures complete transparency and integrity.
One of the best parts of cryptocurrency is that it is completely fraud-proof. This is because when cryptocurrency is created, all the associated transactions are stored in a public ledger. The identities of the owners of cryptocurrencies are encrypted to ensure secure storage of records. Further, since the cryptocurrency is decentralized in nature, you get to own it completely.
Cryptocurrency is easily accessible. All you need is an active internet connection and you are good to go. It also enables people who have no right to use traditional exchange systems but can access the internet to use cryptocurrency.
Most cryptocurrencies are capable of masking your identity. They all work in the same fashion – a group of computers receive transaction information directly from users who want to send money to each other. In this process, the real names of the people stay hidden. Only the respective account numbers and transaction amounts are visible. This approach ensures better privacy and security, even better than credit cards.
This makes the entire arrangement hack-free and fraud-proof.
The Future of Cryptocurrency
Although the cryptocurrency sounds great and all, it has its own loopholes as well. The high-level of anonymity that it provides, for instance, could promote illegal activities like money laundering, and smuggling.
Further, since users prefer storing their cryptocurrencies in a digital wallet, cybercriminals could hack this wallet, and steal their fortune.
However, in spite of all these limitations, cryptocurrencies continue to shine and are expected to become mainstream in the coming years.
The increased reliance of a large number of industries over cryptocurrencies is leaving no stone unturned in making them popular. Some of the popular business names that accept cryptocurrencies include Microsoft, Overstock, CheapAir, eGifter, and Reeds Jewelers.
Further, as more and more cryptocurrencies continue popping up in the market, this is likely to create a positive environment for the virtual currency to prosper and flourish. Libra by Facebook is one such positive step that provided the much-needed boost to the industry.
Let’s not forget that cryptocurrencies make international money transfer better and faster. This rules out any hassles related to converting money from one currency into another.
However, as a large number of countries are looking for ways to regulate the currency, this will defeat its original purpose.
The future is not for us to see, it will be highly exciting to see how things unfold themselves in the near future, and how popular they become.
The Next Steps
Although it is too early to comment on the popularity of cryptocurrency in the coming years, one thing is for sure – cryptocurrencies are a highly secure, convenient, reliable, and faster way to transact. What are your views on this? Do you favor the use of cryptocurrencies in our daily lives? Don’t forget to share your views with us in the comments below.