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What is cryptocurrency?
Cryptocurrency is a virtual currency traded through a digital exchange. The currency system is based on a very complex coding system. Though the concept of virtual currency has become popular after the introduction of Bitcoin in 2009, the story actually began long back.
- 1983: An American Cryptographer, David Chaum, conceptualized virtual currency when he introduced electronic money called ecash.
- 1995: The actual implementation of ecash took place with the introduction of Digicash. This currency was secured using cryptographic codes and required specific encrypted keys for two people to complete a transaction between them.
- 1998: Wei-Dai described b-money, which was supported by a distributed ledger system. It acted as a curtain-raiser for blockchain technology. This technology would later be used for developing the concept of bitcoins, the present world cryptocurrency. Quite sooner, Nick Szabo came up with the idea of bit gold. It was an electronic currency system that required complete proof of work cryptographically described and published to make a person eligible for receiving payment.
- 2009: The year saw a revolutionary breakthrough when a fictitious person named Satoshi Nakamoto introduced Bitcoin to the world. Bitcoin used concepts like distributed ledger system, proof-of-work based on cryptographic hash function SHA-256, smart contracting, etc., to enable a transaction to happen. Since then, there is no looking back, and several cryptocurrencies having different purposes and functions are now ruling the virtual currency market.
Current market about Cryptocurrency News
Current cryptocurrency has grown manifold from the time of its inception. Now, this sector has about 800 cryptocurrencies comprising alternative cryptocurrencies called AltCoins. These are popular as Ethereum, Ripple, and Litecoin. The investors can trade these cryptocurrencies through 25 exchange platforms. Centralized controls do not regulate cryptocurrencies. Thus, there is no control on how these will fare in changing conditions. The extreme volatility of their price makes them a riskier proposition. Users need to earn about the working mechanism thoroughly to ensure the safety of their money.
There are initial coin offerings announced, just like IPOs when any CryptoCoin is introduced in the market for trading purposes. Also, the cryptocurrency market is subject to rising and fall owing to mining practices, and every transaction is irreversible as a decentralized ledger ownership system governs it.
The other process rampant across this space is cryptocurrency mining. The miners earn Bitcoin instead of their service. The service is to complete the blocks as these are added to the ledger. Mining does not require people to invest in fiat currency; they earn it for every block completed. That is why; it is contributing significantly to the current market.
Top currencies of the cryptocurrency
Bitcoin is the most popular cryptocurrency to date. But, it is not the only one available. With about 700-800 cryptocurrencies marking the market space, picking the best ones does take a stringent approach. Some of the most promising cryptocurrencies worth knowing about are:
Bitcoin: This coin marked the beginning of an active cryptocurrency market. It touched about $20,000 in value in 2017. But the very next year, the price plummeted to $3,230 approx. This crypto coin now maintains its value of around $10,000. The total market size of Bitcoins is approx. $200bn dollars.
With this market size, it constitutes about 52-60% of the CryptoCoin markets. All other CryptoCoins apart from Bitcoin are classified as AltCoins.
This cryptocurrency is predicted through Blockchain technology. The blocks of size 1MB capacity were initially used to store transaction records. However, with growing records, the size proved insufficient and slowed down transactions. Thence, the experts came with blocks of 8MB size and recoined this cryptocurrency as Bitcoin Cash.
Litecoin: Charlie Lee created this version of Bitcoin. This cryptocurrency enjoyed the same position relative to Bitcoin as silver holds to the gold. It is faster to trade and settles transactions faster than Bitcoin. The system requirements of this CryptoCoin are lesser than that of Bitcoin’s.
Ethereum: While cryptocurrency makers have worked towards decentralizing the money, Ethereum makers have moved a step ahead and have decentralized the information storage solutions by placing servers connected by nodes spread worldwide. It is the second most popular CryptoCoin after Bitcoin and has a market capital of About $40bn dollars. The cryptocurrency traded on the Ethereum software platform is called Ether.
Binance Coin: This coin utilized Ethereum as a host initially. In 2017, it moved from Ethereum to Binance Decentralized Exchange called DEX. Here, users not only trade the coins but can also convert these into different cryptocurrencies. Thus, volume-wise, the Binance coin is the biggest cryptocurrency exchange platform across the world.
Another reason for its popularity is the discount offered to traders who pay a transaction fee on exchanging CryptoCoin with Binance Coin. It helps keep this cryptocurrency on the radar of investors.
Tronix: The cryptocurrency formed by Tron, a decentralized blockchain platform focused on the entertainment sector. This platform is designed to bring unprecedented change in the entertainment sector as Tron protects the user data while sharing content from various resources.
That is why it is gaining popularity as content creators not only get a sophisticated platform to showcase content; they can monetize it then and there only.
Link: This cryptocurrency is the coin of Chainlink, the oracle’s blockchain network. Oracle is a data provider that offers information to help users design and execute smart contracts. Chainlink does not stop at providing the data only. Using it, the consumers can verify the validity of the data too. On satisfactory validation, they can pay through Link.
ZCASH: Unprecedented privacy is the prime feature of this cryptocurrency. The identity of both seller and buyer entering a contract remains hidden while dealing with ZCASH. It was built originally on a Bitcoin codebase.
Cryptocurrency is traded across specialized exchanges designed for the purpose. The cryptocurrency exchanges are not physical entities, but these are digitized platforms. Like we have exchanged for commodities, currencies, and stocks separately, the cryptocurrency exchanges are industry-oriented and offer the place to trade CryptoCoins designed for a specific purpose.
Recent update 2021
On May 19th, the cryptocurrency traders might have seen the worst nightmare they could ever think of in their lives.
Besides Bitcoin, Ethereum, and Dogecoin plummeting over 30%, the cryptocurrency world lost nearly 1 trillion dollars market cap.
As of now, the cryptocurrency market recorded a downfall of 26.93% in the last 24 hours, according to CoinSwitch Kuber.
Any person who has some finance knowledge would immediately point out the volatility in cryptocurrency trading.
The same volatility played its part in the downfall.
A series of incidents happened in the past few weeks that are being held accountable for the massive downfall, especially in Bitcoin, Ethereum and Dogecoin.
It all started ten days ago when the CEO of Tesla, Elon Musk, regularly advocates for cryptocurrencies, jokingly termed Dogecoin as a hustle on a Saturday Night Live.
And that’s it!
And the trend has continued since then, leading to DOGECOIN currently at $0.35, down by 27.01% in the last 24 hours.
In case you want to learn about DOGECOIN in detail, do check out our blog on the same!
A similar case happened with the star of cryptocurrencies, Bitcoin.
In February, Tesla Inc. announced that it had bought Bitcoins worth 1.5 billion dollars and announced the acceptance of the currency for its products.
Such similar steps by Tesla and other companies, supported by boosts through Elon’s regular vocalization, skyrocketed the price.
On May 13th, Elon Musk and Tesla announced the withdrawal of their policy of accepting Bitcoins for purchases, citing environmental issues.
And following the similar trend of DOGECOIN, the BITCOIN prices fell below $45000, which was the lowest recorded in the past three months.
The only thing that added fuel to the fire was the incidents in China that led to a drop that nobody expected.
The People’s Bank of China uploaded directives to all financial institutions and internet-based firms, prohibiting services that involved cryptocurrencies.
The services majorly included registering, trading, exchanging, and using cryptocurrency as a medium to clear settlements.
That eventually crippled down the cryptocurrency trading world and even led to the downfall of ethereum.
As of now, 20th May(3:00 AM IST), Bitcoin is trading at $37860.13, suffering a 24-hour loss of 12.67%.
Similarly, Ethereum at $2478.02 suffered a loss of 27.64% and Doge at $0.337018 at a loss of 30.17% in the last 24 hours.
The factors behind the recent downfall of the cryptocurrency world, resulting in a loss of approximately 1 trillion dollars market cap, are a perfect example of the volatility.