You’ve heard of cryptocurrency before. No? You must have heard about Bitcoin at least. Ever wondered what these are? Wikipedia defines cryptocurrency as “A cryptocurrency (or cryptocurrency). Is a digital asset designed to work as a medium of exchange? That uses strong cryptography to secure financial transactions? Control the creation of additional units, and verify the transfer of assets.” On 9th January 2009, a certain anonymous guy on the internet going by the name of Satoshi Nakamoto created something called Bitcoin and released a paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System”. Initially, people would mine Bitcoin just out of curiosity.
It was all fun and games back then.
It was worthless but fun. Who wouldn’t want a cute virtual currency and trade it to someone willing to give them the latest video game for it? In the recent few years though, things have changed and now the previously worth-nothing bitcoins are worth a lot. How much do you ask? As of this writing, 1 Bitcoin is 6,66,960.82 rupees or 9357.04 dollars. That is a lot of money! Satoshi Nakamoto is said to have mined over a million bitcoins. There are many others who have a lot of bitcoins with them. Now there are many digital currencies like Ethereum, Monero, LiteCoin, Nem, and so forth.
So why are cryptocurrencies creating such a buzz?
Is it purely because their value has risen and with it the number of cryptocurrency millionaires? The answer is yes but it is much more than that. See, most cryptocurrencies use something called a blockchain which is necessary for mining or trading them. This technology is being seen by banks and other institutions with great curiosity. As they feel it would play an instrumental role in shaping the digital economy and the internet marketplace. So what are the advantages of cryptocurrencies over traditional money in our banks?
It turns out, there are quite a few advantages.
Some of them are anonymity (no real-world identity required). No central regulator like a central bank to call the shots or interfere with the system. Being unaffected by demonetization and other government actions. Almost nil transaction fees unlike PayPal or Western Union and other such systems and International reach. Instead of banks that will require you to jump through many hoops before you can do transactions, send or receive money internationally, cryptocurrencies don’t have any of that tedious paperwork involved. There are other advantages also, like having a highly secure system because of encryption, being transparent because everyone can see the transactions on a global ledger, and being a fast means of sending money with no middleman involved.
Countries are noticing this and many have decided to make their own cryptocurrency or have their own crypto-trading exchanges. It is possible that at this pace and with a tech-savvy generation being the users of Web 3.0. Cryptocurrencies may well be an alternative to traditional currency. We already see freelancers on the web demanding payment in cryptocurrency. Because of the almost negligible processing fee and zero-platform costs. The war on fiat currencies has been declared and crypto seems to be gaining momentum as we speak.