Cryptocurrency: Decentralization of the Global Economy
The wave of going cashless resulted in online transactions. That didn’t deter banking systems to follow our every move and financial activity. But cryptocurrency promises to change the face of the global economy as we know it.
What started ten years ago with a white paper Bitcoin: A Peer-to-Peer Electronic Cash System by an entity named Satoshi Nakamoto, who nobody is sure, is an individual or a group of it. In an attempt to unmask the real person, a few people have been doxed such as another individual named Satoshi Nakamoto from Japan to computer scientist Hal Finney to another computer scientist Craig Wright. The right owner of the moniker who seems to be a ghostwriter for it still evades the world’s attention.
Cryptocurrency, as all the hoopla around it, seems like a standard case of blind people explaining parts of an elephant: the trunk, the legs, the tail but never figuring out it was an elephant. Everyone has heard of it but nobody knows about it. We break down the cryptocurrency conundrum.
The Lexicon of Decentralized Economy
Cryptocurrency: Cryptocurrency is a digital asset secured by way of cryptography and works as an exchange medium. It can replace the kind of currencies we use in the modern day such as electronic wire systems, cash, and credit. It doesn’t require third parties to secure payments and authorize it meaning it removes the extra payment charged for activities related to transactions.
Bitcoin: Bitcoin is a cryptocurrency. Other cryptocurrencies catching the frenzy and confidence of investors, government authorities, and anyone, in general, are Litecoin (LTC), Dash, Zcash (ZEC), Ethereum (ETH), Ripple (XRP), and Monero (XMR). 3000 cryptocurrencies have seen their birth since the advent of bitcoin although many saw premature death. It is still a new concept protruding its arms and legs out the egg it is in and there are not many takers. Some of the retailers who accept bitcoins are Expedia, Newegg, Dish Network, and Overstock.
Blockchain: The cryptocurrencies are validated by blockchain which is a distributed digital ledger keeping a record of every transaction. Every record is called a block and is recorded simultaneously on different computers. It is almost impossible to alter retroactively without the collusion of people in the network to alter many blocks which is highly improbable.
The Effects, Decentralization of Economy, Brings
Scarcity: Partly influenced by the massive scarcity of bitcoins, the market value of bitcoin has surged drastically. The earliest ways in which you could gain access to bitcoin was a kind of lottery system called mining. The process could only be catered by specialized computer programs which subsequently meant the individuals with the fastest machines could afford it and bitcoins were hard to lay hands on. Today, the world stands different as you can buy bitcoins from online cryptocurrency exchanges.
Influence: The scarcity and high market value of bitcoin can also be called as fallacies of bitcoin- the majority can’t buy it. It doesn’t translate into bitcoin being leveraged for commercial transactions. It is seen more as an investment opportunity where very selective individuals buy them ogling huge pay-offs in future.
Future: Majority of governments around the world are warning against buying bitcoins. A few other are banning it as a safeguarding measurement. The risks are mammoth as no central repository keeps a tab on it. Cryptocurrency doesn’t warrant against power loss or computer crash, as balance is totally wiped out with no holdings backup copy. Not immune to thefts, almost 40 cases of thefts have been reported, a few exceeding $1 million. Moreover, prices fluctuate heavily depending on the supply and demand market dimensions.
Antithetically, some governments are cottoning to the idea and contemplating venturing into cryptocurrencies by way of Centralized Digital Currencies (CDCs) although the boundaries remain to be demarcated of what constitutes the legality of it.
In a race to liberate the world from the shackles of an authoritative power governing it, cryptocurrency gives a hope of an alternative financial system. More power to the individual in the next economy.