The age of Cryptocurrency
Before we delve into cryptocurrency and Bitcoin, there are some fundamental concepts which needs understanding.
The cryptocurrencies, especially Bitcoin's, massive surge in the year 2017 - more than 1000% - has all the hallmarks of the huge speculative bubble, according to many renowned scholars. Other cryptocurrencies like Ethereum, Litecoin and Monero also rocketed throughout the current surge. Bitcoin is now considered as the largest bubble in history, and the whole cryptocurrency market is highly inflated at present, and many of them are comparing it with "The Dutch Tulip Mania (or "Tulipomania") of 1634-1637", in which traders developed primitive forward options trading, so they could trade bulbs outside the planting season. Another thing that is driving the price of Bitcoin is its rarity, maximum number of Bitcoin that can be mined is capped to 21 million by its developers.
Whatever may be happening with the cryptocurrency, never believe the enticing phrase "this time is different", because it's not. We don't know what will be the future of cryptocurrency especially Bitcoin, but it is evident from the present trend and our historical knowledge that there will be a crash in the market. But hope for the best.
What is Cryptocurrency? A digital asset designed to work as a medium of exchange. Cryptocurrencies are classified as a subset of digital currencies and are also classified as a subset of alternative currencies and virtual currencies. Cryptocurrency is used cryptography to-
- Control creation of additional units
- Secure its transactions
- Verify the transfer units
What is Digital Currency (or Digital Money or Electronic Money or Electronic Currency)? Any currency that is present only in a digital form but not in the physical form (like notes and coins) is a digital currency. It will be like physical money with instantaneous transaction and borderless transfer of ownership e.g. cryptocurrencies and virtual currencies. Digital currencies can be used to buy physical goods and services but they can be restricted within some communities.
What is Virtual Currency (or Virtual Money)? It is a unregulated digital money, issued and controlled by its developers and used within a specific virtual commodity.
Central Bank Digital Money (CBDC): It is the digital form of fiat money established by law.
Four key properties of a money are:
There are hundreds of cryptocurrencies available around the world. Among them, Bitcoin is the most prominent example and Bitcoin is a type of cryptocurrency - in fact other cryptocurrencies are sometimes referred as the altcoins as in alternative to Bitcoin. Bitcoin was invented by unknown person or group of person under the name Satoshi Nakamoto and release as open-source software in 2009. Over the course of Bitcoin history, it has undergone rapid growth to become a significant currency both on and offline - from the mid 2010s onward, some businesses on a global scale began accepting Bitcoins in addition to standard currencies.- Issuer - Either Central Bank (RBI in India) or others
- Form - Electronic or digital
- Accessibility - Universal or limited
- Transfer Mechanism - Centralised and de-centralisedd
The cryptocurrencies, especially Bitcoin's, massive surge in the year 2017 - more than 1000% - has all the hallmarks of the huge speculative bubble, according to many renowned scholars. Other cryptocurrencies like Ethereum, Litecoin and Monero also rocketed throughout the current surge. Bitcoin is now considered as the largest bubble in history, and the whole cryptocurrency market is highly inflated at present, and many of them are comparing it with "The Dutch Tulip Mania (or "Tulipomania") of 1634-1637", in which traders developed primitive forward options trading, so they could trade bulbs outside the planting season. Another thing that is driving the price of Bitcoin is its rarity, maximum number of Bitcoin that can be mined is capped to 21 million by its developers.
Whatever may be happening with the cryptocurrency, never believe the enticing phrase "this time is different", because it's not. We don't know what will be the future of cryptocurrency especially Bitcoin, but it is evident from the present trend and our historical knowledge that there will be a crash in the market. But hope for the best.
Very Informative
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