Cryptocurrency - What, how and to where
Since the beginning of time currency has been an
important part of our lives. For the majority of people, it is the driving
force of their lives. So it’s only fitting that we take a look at its newest
and most secure form yet. But before that, we shall take a quick tour through the
History of Currency and its origin.
The Barter
System
In the early stages of humanity, there was the barter system, which involved exchanging goods and services for each other.
The barter system had some imminent flaws, like:
· Having
the people’s requirements coincide, i.e., you have something the other person
wants, and the other person has something that you want.
· There
is no common measure of value – anyone can have a different value for their
product.
· Not
all goods can be divided and subdivided, for example, you cannot trade half of
a chicken for 1kg of wheat.
· The goods cannot be transported easily as it usually involved trading some physical objects.
Later on, these flaws of the barter system were
recognized, and to mitigate these problems, official currencies started to come
into existence.
· The
first known piece of modern currency can be traced back to Mesopotamia and that
too 5000 years ago!
· At
that time, it was Recognized as Shekel.
· Later
as Mankind evolved currency materials transitioned to precious materials such Gold
And Silver.
· The
beginning of using metals as currency can be found around 600B.C.
· As
humans have evolved and moved forward through history and time currency has
become
more accessible and convenient.
1: Mesopotamian
Currency Shekel
The currency we know today and widely used i.e., modern
currency such as paper and through the means of credit and debit cards.
· The
first paper currency was introduced around 700A.D.
· And
as money was being wildly popularized banks came into existence.
The modern currency is embedded with some weak links -
· Modern-day
currency is controlled and regulated by banks with assistance from the government.
· Due
to the nature of the working of banking system they are prone to attack by
external sources and internal mishaps.
· Many
factors are hindering the smooth flow of the economy and the majority of them
are caused by all the money being accumulated in one place and a centralized system
that is currently in use.
· Also
due to lack of security in the credit and debit system there are millions of
cash frauds happening worldwide.
· Due
to the nature of the currency, it holds value in a particular country and it is
also extremely volatile as there are daily drastic fluctuations in rates that
are influenced by global politics.
· Some
of the examples are Uganda, Venezuela, and Iran. These countries were affected
by inflation and middlemen.
These factors present themselves as an Achilles Heel,
to an otherwise fortified and fail-safe system.
No doubt as a
species we are creatures of habit. We tend to despise change but it’s long time
we transitioned to a system of currency, less prone to attacks and more
suitable to the needs of globalization and the digital age. That’s where
Cryptocurrency steps in.
Cryptocurrency
Cryptocurrency is our transition to the future as it does
not encompass many of the contemporary flaws present in our currency system,
and at the same time, it is taking a step towards a future where the currency
is available in the same denominations across globes, thus eliminating many of
the problems.
As people are getting more tech-savvy cryptocurrency
is beginning to take off. in a few years the price has gone up substantially
while the user base has increased by multi-folds. even to the educated minds,
cryptocurrency is a relatively alien concept.
So now let’s delve deeper into its concept and its
credits.
Feature of cryptocurrency –
· There
is a limit to how many can exist; unlike paper currency, the government can
print as many bills as they want. For Bitcoin, this is limited to 21million
coins.
· The
transfer of funds can be easily verified.
· Not
reliant on a bank, hence working in a decentralized manner.
· Allows
for new units to be added, only after certain conditions are met, in the case
of bitcoin, the miner will receive bitcoins, only when a block is added to the blockchain.
· Negligible
transactions costs.
Cryptography is the study of secure communications technology
that allows only the sender and intended recipient to view the details of the transactions.
In layman’s terms, it is an essential and perhaps most vital part of the blockchain
system on which cryptocurrency is based that allows absolute privacy for
transactions.
Cryptography is an essential part of blockchain technology.
Pros of cryptocurrency:
· It
can’t be counter faked, or users can’t be scammed unlike with modern currency
and credit, debit cards.
· No
matter the sender and receivers’ location transactions are carried out in a matter
of minutes without undergoing any taxations.
· There
is no manipulation of user data as it is a completely digital and remote server-based
operating system.
Cons of cryptocurrency:
·
Cryptocurrency
can’t be traced back to its source and due to this very nature, it’s being
widely deployed in illegal activities by cartels and crime associations.
·
Crypto market is highly
volatile and the smallest of movements such as a tweet from a celebrity or its
association with a brand can cause its value to skyrocket or plummet in a matter
of minutes.
· Compared to modern currency its loss factor is high for several reasons which range from being unaware of the market trends to investing in crypto from unauthorized platforms
However, the cons aren’t limited to the user. They extend way beyond to the environment. As crypto is blockchain-based it needs to be mined by servers which requires a lot of processing power and electricity. In the long run, it’s harmful to the planet but there are new alternatives such as Litecoin which require a quarter of the power for mining and are still a viable part of the blockchain.
While
for some people future of crypto may be in fog it is pretty clear that it’s the
way to a new future where currency and economy are controlled by individuals
not by mega-corporations or governments.
To
the new eye, it might seem overwhelming but even with its flaws crypto is a far
better alternative to hard cash and it will only get better over time.
Conclusion:
· While
crypto is still in the making process it shows a lot of promise for the coming
future.
· It’s
promising for people looking to expand their investment horizons.
· Its
pros outweigh the con and as it’s still in the development phase, we can be
certain it will get more refined, and open new doors towards a progressive
future.
Credits & References: Aditya Agre(FY Instrumentation) and Nakshatra Gaikwad(SY Mechanical) - Team Tech Tuesday
2) https://www.investopedia.com/terms/c/cryptocurrency.asp
3) https://n26.com/en-eu/blog/pros-and-cons-of-cryptocurrency
NOTE:-
This blog is meant for educational purposes only. We do not own any Copyrights related to images and information, all the rights go to their respective owners. The sole purpose of this blog is to Educate, Inspire, Empower, and to create awareness in the viewers. The usage is non-commercial(Not For Profit) and we do not make any money from it.
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