While blockchain is a mighty revolutionary force, the most significant blockchain application is cryptocurrency. Developed upon the decentralized platform of blockchain, cryptocurrency is all set to revolutionize the world, and for better. Crypto serves as both payment mode and investment asset- around 70%+ institutional investors have expressed their desire to invest in crypto in a recent survey. While cryptocurrency is developed to launch a breakthrough change in world finance, it also assures excellent return potential as well. The crypto market is poised to scale up by 5x by the year 2030. It would be safe to claim that cryptocurrency are the perfect places to start investing.
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For those new to the world of crypto, the post below offers a brief on the world of cryptocurrency.
Cryptocurrency- overview and technology
Cryptocurrency, as mentioned above, is a
blockchain application. Bitcoin is the first and the #1 crypto that was launched in 2009. As a blockchain application, cryptocurrency operates in a decentralized environment where it is not governed by any centralized authority. There is no physical form of cryptocurrency- all the cryptos rest online on their native blockchain platform. As of now, you have 10,000 cryptocurrencies and the number is only growing.
How are cryptocurrencies issued?
As cryptocurrencies are not physical objects, these are not printed out like fiat currency notes. Rather, cryptocurrencies are minted out online. As of now, there are two methods to mint cryptocurrencies- mining and staking.
Mining is followed by Proof-of-Work blockchains that use mining to verify blocks and reward miners with new cryptos. This is how new cryptos come into circulation. Staking is followed by Proof-of-Stake blockchains that use the staking process to verify blocks and reward validators/stakers with new crypto.
How does crypto function?
Unlike fiat currencies that are issued by national governments, cryptocurrencies are developed by independent crypto development teams. Again, unlike fiat, crypto does not operate under any centralized authority and follows an independent mode of operation universally. The value of crypto is always universal- the value of crypto would be the same in both Germany and the USA. There is no need to convert crypto payments when you are using crypto as a payment in a foreign country.
Crypto, being a blockchain application, operates in a decentralized manner. It implies crypto transactions do not involve any form of intermediaries. In other words, crypto transactions are always direct and P2P. All the crypto
transactions are recorded in the immutable ledger of blockchain and nobody can alter or manipulate the recorded data by any means. Then, all the crypto transactions are always guarded by high-profile cryptographic protection that is almost impossible to break by even the most seasoned hackers.
Benefits of cryptocurrency
Faster and more affordable payment
As crypto transactions are devoid of middlemen involvement, these always assure much lesser transaction fees in comparison to fiat-based transactions. The time taken is also less for crypto transactions, thanks to their decentralized and direct payment format.
Quicker and economical money transfer economically
If you have to send money to a vendor, a friend, or a family member residing in a foreign country, cryptocurrency is the answer for you. Fiat-based international transactions take a whole lot of time and also involve exorbitant fees. But, you don’t have such problems with cryptocurrency. Crypto-based international transactions are almost instant and also charge a fraction of what it takes for traditional international transactions.
This particular privilege has helped several small businesses to expand their reach online, without worrying about huge expenditures.
Creation of even ground in finance
Cryptocurrency breaks the shackles of red tape and bureaucracy imposed by centralized authorities like central banks in the traditional fiat world. High bank fees and transaction charges are some of the reasons as to why a large section of the world populace is still unbanked. But, crypto eliminates authority by centralized forces, thereby creating an even and fairer atmosphere for all, including people from all kinds of financial backgrounds.
Higher returns
The crypto market is wildly volatile and hence is able to offer higher ROI in comparison to traditional investment assets, like stocks.
Final words
Cryptocurrency is also a high-risk market given lack of regulation and extreme volatility. However, the IMF and national governments are proactively working towards developing a regulatory framework for the crypto industry.
