The dawn of 2018, brought with it an intensive surge of hype. Those of you who hadn’t heard of it previously, must have by now, surely come across the term Bitcoin. The massive drop in the value of Bitcoin around mid-December has kept not only the investors but also the digital media on its toes. Almost everyone is talking about cryptocurrencies, some strongly opinionated while others purely speculative. Along with Bitcoin, the emergence of various Altcoins have added to the hype and have managed to spark the curiosity of the layman; very rightly so. Until now the history of economy has seen only two types of currency: Tangible money that is backed by a commodity like Gold and Fiat money that is an accepted medium of exchange as per the authority’s decision of the respective nation.
With the advent of cryptocurrencies like Bitcoin, we see a third type emerging – Blockchain Economy.
The Blockchain Economy is dependent on the cryptocurrency market, since all cryptocurrencies are essentially based on blockchain technology. It is a technology which confirms the authenticity of a transaction by solving unique mathematical algorithms, thus eliminating the need to endow trust in third parties such as banks, to execute a particular transaction. In this process, each group of transactions referred to as a block, is authenticated only once the said block is connected to the previous block by solving complex algorithms; thus creating a blockchain which is not only encrypted using cryptography, but is also published as a public ledger available to everyone. In many ways the blockchain is a self-auditing system that is updated across all the networks it is connected to, thus de-centralizing in the most literal sense. This chain of encrypted blocks is impervious to alterations, since making changes in any block would mean fabrication of all the following blocks in the blockchain, resulting in the prevention of the possibility of fraud and double spending and even corruption.
With the onset of such a thorough technology backing the cryptocurrency, investors are thrilled about the scope of opportunities it opens up for them. The cryptocurrency market is very much like a stock market, where the value of a particular cryptocurrency fluctuates depending on certain factors. The volatility of a cryptocurrency is generally higher than stocks, however that’s no reason to stifle investors having a strong foresight. The American Investor, Robert Arnott, perfectly sums up the mentality of cryptocurrency enthusiasts, when he says, “Investing in what is comfortable, is rarely profitable.” The Cryptocurrency market undoubtedly holds a lot of risk but it also promises immense growth. We see the financial market accepting the revolution of these digital currencies. The cryptocurrencies have managed to tap the inspiration of various entrepreneurs, creating start-ups, the resulting employment as well as hundreds of innovative crypto-tokens like Etherum, Ripple, Stellar, NEO, Monero etc. According to Thomas Frey, cryptocurrencies will displace 25% of national currencies by 2030. While the world is still enthralled to see what this blockchain technology backed currency is capable of doing, it is safe to say that the path ahead for cryptocurrencies is bright. It surely looks like the coin of the future.