Are Cryto Currencies Dead
Barely a decade ago, a person or group of people known by the pseudonym, Satoshi Nakamoto developed the concept of cryptocurrency when he/she/it/they developed Bitcoins, using blockchain technology. Cryptocurrencies are based on the concept of decentralization, distributed ledger system, peer to peer transmission etc. This omits the need of a central regulating authority and enhances security therefore cryptocurrencies have found many uses in the modern digital world.
Bitcoin is the most popular cryptocurrency and is more or less considered as the gold standard for cryptocurrencies. In 2017, the value of Bitcoins surged to an all time high and hit $20,000 and then depreciated. The current price of Bitcoin continues to linger between $5,000–6,000. If one calculates, the price of Bitcoin has fallen 65% from it’s 2017 highs and has not recovered ever since. Because of this fluctuation, many people thought that cryptocurrencies are dead. Here are some arguments that state the contrary.
- The event stated above is related to Bitcoin, one of the cryptocurrency available in the market. The value of Bitcoin has not exactly been stable because of news (better call it rumors) that said that some exchanges, like the Binance Exchange had been hacked. The initial belief was that a block was mined and by some shape or form that created one billion new SYS. The truth, however, was that the attackers were simply moving the same 40 million SYS around. Bitcoin’s market value is $130 billion which represents only about 40% of the overall cryptocurrency market’s value. One cryptocurrency should not determine the fate of the entire group, even if it seems to be the star of the group.
- Critics always believed that cryptocurrency is a bubble that could burst anytime. An economic bubble increases slowly over a long period of time and then crashes suddenly. The Global Financial Crisis of 2008 is a fresh memory of the same (Bitcoins were developed as a result of this event) where the price of houses were increasing slowly, until the housing bubble burst. The price of Cryptocurrency (as a whole), on the other hand, rose astronomically and declined slowly. The staggered decline of Cryptocurrencies took about three times longer than its rise. Thus, cryptocurrencies is anything but a bubble, it is in fact the opposite of it.
- As mentioned before, there was no Bitcoin security breach that would render Bitcoin or any other cryptocurrency as useless.The blockchain and smart contract technology remains intact and as a matter of fact, its application is only growing. This emerged as a supporting phenomenon of cryptocurrencies and popularized it. Even after a fall in Bitcoin value, blockchains and smart contracts are better than ever and are deemed to act as an alternative to the legacy financial systems (and other systems) that run the world today.
- Up until now, key investors and institutions, round the world expressed their reservations against the use of Cryptocurrency. This was probably because many countries did not accept Bitcoin as a legal tender and therefore there are hardly any rules and regulations regarding cryptocurrencies till now. But now there has been a marked change in this attitude. The Marshall Islands became the first country to recognize cryptocurrency as a legal tender. While Venezuela became the first country to launch its own cryptocurrency, the virtual Petro which is backed by crude oil reserves. Since governments have also started accepting Cryptocurrencies, more people and institutions will use Cryptocurrencies now. This will eliminate the second biggest dilemma cryptocurrency skeptics have had for long – legitimacy crisis. They always feared if no one will ever accept crypto currency and their investment will go in vain.
- More businesses are also accepting cryptocurrency as payment for goods and services. It includes not just major companies like PayPal and Expedia whose core audience are young or the millennials, it also includes traditional banking companies and an influx smaller businesses as well. Big names like Goldman Sachs and Citigroup are now believed to be involved in Cryptocurrencies. Even People’s Bank of China filed a patent for Digital Currency Wallet. Cryptocurrencies are also the preferred method of payment for internet based freelancers which are becoming an increasingly important economic engine of the digitized 21st century.
- Right now, a network can process about 7 transactions per second and fees depend on how many people are using the system. So a Bitcoin transaction normally takes about 10 minutes. In March 2018 the Lightning Network went live, marking one of Bitcoin’s largest issues resolved – the time to process a transaction. Soon this will pass on to the other Cryptocurrencies as well. This small development related to the cryptocurrency will surely enhance the possibilities of its usage, rather than diminishing it.