A cryptocurrency or simply crypto is a collection of binary data which is designed to work as a medium of transaction. In a narrow sense, we can deal with it as a type of currency that used digital files as money. Crypto” refers to the various encryption algorithms and cryptographic techniques that safeguard these entries, such as elliptical curve encryption, public-private key pairs, and hashing functions. Crypto is a medium of exchange that is encrypted and decentralized. It is based on blockchain technology. Bitcoin is the first cryptocurrency. According to the paper published in 2008 by Satoshi Nakamoto titled “Bitcoin: A peer-to-peer Electronic Cash System.”, describes it as a payment system that is based on cryptographic proof instead of trust. The proof is verified and recorded in the blockchain. Investing in crypto is a bit tricky predicting the rise and downfall of crypto a bit resembles the stock market.
The global user base of cryptocurrencies increased by nearly 190 percent between 2020 and 2021, only to accelerate further in 2021. Almost 221 million people are cryptocurrency users around the globe. Blockchain technology is secured but cryptocurrency has various cons too, if not operated well it might turn into a devil as it requires some technical knowledge hence is requested to have some surface information about online transactions. some major advantages of crypto:–
- inflation has caused many currencies to urge their value to decline with time but there are only 21million bitcoins in current world, hence its demand value will increase that counters inflation.
- A major pro of cryptocurrencies is that they are decentralized. It keeps the currency monopoly free and in restraint, so no organization can determine the flow and so the worth of the coin, which, in turn, will keep it stable and secure.
- Cryptocurrencies have always kept themselves as an optimal solution for transactions. Hence is the easy and faster mode of transaction.
- The block chain developers relies on different mathematical puzzles, complex algorithms, etc which are hard to decode. It makes cryptocurrency safer than general electronic transactions.
- It is cost effective mode of transaction as cryptocurrencies is to send money across borders. With the help of cryptocurrency, the transaction fees paid by a user are reduced to a negligible or zero amount as it doesnot involves any third-party(middle man) in between the transaction.
Although digital currency is increasing in popularity across the world, in Nepal, according to the Nepal Rastra Bank Act and the 2019 Foreign Exchange Regulation Act, Nepal Rastra Bank has officially declared Bitcoin and other cryptocurrencies as illegal forms of financial tender.
In recent years value of cryptos has increased like never before. According to CNN Business, the total value of all cryptocurrencies in circulation stands at more than $2.2 trillion, with bitcoin accounting for about $920 billion of that total.
Removing middlemen can be a major upside for cryptocurrency. It is controlled by the community where one doesn’t have to rely on the government big companies or stocks.
In contrast come countries like Germany, the United Kingdom, Denmark, France, etc have officially declared cryptocurrency as one of their official modes of transaction. We can conclude that with the rapid growth of the digital world, cryptocurrencies might takeover international standard currencies and turn into the major modes of the transaction between various people and parts across the globe.
Thank you Suwarna Pyakurel, +2-SOS HGS Sanothimi