‘Cryptocurrency’ is one of the few words that become the main topic of discussion in every conversation in today’s time. Whether it’s a get-together, ladies’ day out, birthday party, or a road trip, cryptocurrency is discussed to some extent on all types of occasions. The buzz around this word has not reduced at all ever since it first made the headlines in the year 2009.
Even though people had become quite used to net banking and e-payments, it took some time for them to digest the whole concept of digital currency. It’s the year 2022 now, and even today, despite having a vast depository of offline and online resources to understand how crypto works, a significant percentage of the world population faces tons of doubts regarding it.
During these years, i.e., from 2009 to 2022, a lot of changes have taken place, not just in the cryptocurrency sector but also in the mindset of people. Many people have turned from being the critic of crypto or virtual currency to being the investor in the same.
Considering the current scenario, it would not be wrong to say that cryptocurrency has been widely accepted. The emergence of various types of cryptocurrencies and the platforms used for managing the investment made in cryptocurrencies, is proof that digital currency is here to stay. The future holds many more exciting events for all the stakeholders in the cryptocurrency industry.
In this blog post, we have tried to cover in brief some of the important events that have taken place in the crypto market in these twelve years. We have also tried to cover some recent happenings that indicate why the virtual currency has a huge scope in the coming years.
Launch of Cryptocurrency and Blockchain
A cryptocurrency is a form of currency that exists in digital form. In other words, there are no coins or notes that represent a cryptocurrency. The entire records regarding the mining, buying, selling, and storing of cryptocurrency are maintained digitally. Unlike physical currencies, such as the US Dollar, Japanese Yen, and Indian Rupee, digital currencies are not restricted to one country or geographical region.
However, the recent trend wherein the governments, in association with the central banks, are planning to launch their own cryptocurrency might change this fact. A digital currency issued by the central bank of a country is known as a ‘Central Bank Digital Currency’ (CBDC). It is also called ‘Digital Flat Currency’ or ‘Digital Base Money’.
The launch of ‘eKrona’, which is also known as ‘e-Krona’, a CBDC launched by the central bank of Sweden, is a prime example of how government-led agencies are also willing to participate in the wave of cryptocurrency. This project began in the year 2017 and completed the pilot phase in the year 2021. As of now, e-Krona is available for public trading through a private sale.
Although incidents related to the use of digital currency were reported before the year 2008, cryptocurrency first grabbed the attention of people in that year as Satoshi Nakamoto shared the information about Bitcoin through a white paper. The reason behind this is that Bitcoin is the first decentralized cryptocurrency. Satoshi Nakamoto created Bitcoin. However, this name is believed to be a fake name that has been used by an individual or a group that created the first-ever decentralized digital currency.
Blockchain (The name used to refer to the chain of blocks) is a technology used to maintain the records related to cryptocurrency. These blocks are linked to each other with the help of cryptography. Thus, all the records are secured. No person or agency can find out the details about the cryptocurrency transactions taking place in any part of the world. Cryptocurrencies are controlled in a decentralized way.
Flood of Cryptocurrencies in the Market
Once bitcoin became popular, the market became flooded with numerous cryptocurrencies. People buy and sell these virtual currencies through portals made especially for this purpose. You can find various websites and mobile applications that allow the general public to trade in these cryptocurrencies. People even use digital currency to make payments for products and services purchased.
Due to the rising popularity of virtual currencies, their prices keep increasing. So, a large number of people buy one or more virtual currencies of their choice for investment purposes. They sell cryptocurrencies available with them when those currencies are being traded at a higher price than the price at which they bought the same. The portals used for making transactions charge certain fees.
Apart from Bitcoin (BTC), the other cryptocurrencies that you can buy are – Ethereum (ETH), Dogecoin (DOGE), Binance Coin (BNB), XRP (XRP), Polkadot (DOT), and Avalanche (AVAX). At present, there are more than two thousand cryptocurrencies in the market. Cryptocurrencies can be basically divided into five types: 1) Payment Currencies, 2) Blockchain Economies, 3) Privacy Coins, 4) Utility Tokens, and 5) Stablecoins.
Government Regulations Regarding Cryptocurrencies
As you must have understood by now, governments don’t regulate or control cryptocurrency. They cannot track the transactions that involve any virtual currency. But over time, governments of many countries have formulated certain rules or guidelines to ensure that financial matters are handled smoothly.
For example, in some countries, the government charges taxes on the transactions involving cryptocurrencies as well as profit arising from the same. The companies that build platforms on which users can trade in cryptocurrencies are also under the radar of the government. They have to comply with various regulations meant for business enterprises in their respective countries.
Rules, at times, can also be applied to bitcoin mining, the process used for creating new units of bitcoin. Just like bitcoin, all other cryptocurrencies also require mining. Many people carry out the activity of crypto mining. Along with creating new coins, mining is also used for verifying cryptocurrency transactions. The users are awarded the coins created by them. They don’t have to pay for the coins.
Cryptocurrency is not a fad, unlike what many people thought at first. It’s a great avenue for investment for people all over the world.