CRYPTOCURRENCY: THE FUTURE OF MONEY
Buying cryptocurrency may be an exciting way to explore new experimental investments. But cryptocurrency should carry a warning label like cigarettes: “This product may be injurious to the health of your finances. Never buy more than you can afford to lose.”
The term "cryptocurrency" is derived from the encryption technology used to protect the network. Cryptocurrency is a payment method that can exchange goods and services online. Cryptocurrency operates through a technology called blockchain. Blockchain is a decentralized technology spread across many computers that operates and archives transactions. It is extremely inconstant which makes the value vacillate drastically. According to data from the market research website coinmarketcap.com, there are 5898 different cryptocurrencies that are publicly traded. The global crypto market capital is $1.65 trillion, on August 1, 2021. Bitcoin is the most popular cryptocurrency, followed by other cryptocurrencies such as Etherum, Tether, Binance Coin and Cardano.
Over the past few years, cryptocurrencies have grabbed the headlines as well as the latest rumors. Cryptocurrency has boomed because of its ease of transfer. To trade cryptocurrencies between two parties, you don't need a third party or an intermediary. Not only as a currency but also as an investment, cryptocurrency is popular. Another reason people are drawn to cryptocurrencies is their value. Investing in cryptocurrencies is like investing in the stock market. In 2017, when Bitcoin was launched, it was worth around $100. Now, in 2021, Bitcoin has hit an all-time high of $62,000. Bitcoin's price is currently $41,711; on August 1, 2021. This growth is enough to attract people into investing cryptocurrency. Not only Bitcoin, but other cryptocurrencies like Ethereum, Litecoin, Dogecoin, and Cardano are following the same growth trend to become one of the most profitable cryptocurrencies on the market. Cryptocurrencies are secure. Cryptocurrencies are built on blockchain technology, designed for security and privacy. Transactions made can’t be easily traced as they involve navigating through a series of web transactions. Blockchain is open source that shows the level of security without being hacked. The only way to hack cryptocurrencies is for ecosystem companies to have weaknesses in their websites and provide relevant information that can be used to hack wallets, but in general, cryptocurrencies are largely safe and can be used for future use to long-term currency. The cost of using cryptocurrencies is very low. Banks and financial institutions charge for everything. Despite the market crash, the cryptocurrency market will continue to grow. As more and more companies and institutions like Elon Musk’s Tesla and software firm MicroStrategy welcome cryptocurrency, the possibility of cryptocurrency becoming a real payment method in the future will only increase. As the market is under correction, right now the sky’s the limit.
Cryptocurrencies have faced criticism for a variety of reasons, including their use for illegal activities, exchange rate fluctuations, and the fragility of their underlying infrastructure. However, they were also praised for portability, split ability, inflation resistance and transparency. China has warned investors about speculative cryptocurrency transactions, banning settlement companies with financial institutions from providing services related to cryptocurrency transactions. On the other side, later this summer, El Salvador will become the first country in the world to make a cryptocurrency legal tender alongside the US dollar. According to an analysis by the University of Cambridge, Bitcoin uses more electricity per year than in Argentina as a whole. "Mining" for the cryptocurrency is a power hungry task that involves many computer calculations to confirm a transaction. Cambridge researchers say they consume about 121.36 terawatt hours (TWh) annually. In Bangladesh, central bank of Bangladesh, Bangladesh Bank (BB) still considers that cryptocurrency carries financial and legal risks for its users. Bangladesh Bank asked people to refrain from transacting or trading of cryptocurrency as virtual coins are illegal under the laws of the country. Though central banks of some nations such as Japan, Singapore, the United Arab Emirates and the United States of America have officially accepted cryptocurrency recently.
Buying cryptocurrency in 4 steps
The world is clearly divided about cryptocurrency. On the one hand, there are supporters such as Bill Gates, Al Gore and Richard Branson. They say that cryptocurrencies are superior to regular currencies. On the other side are people such as Warren Buffet, Donald Trump, Paul Krugman, and Robert Shiller, who are against it. Krugman and Shiller, who are both Nobel Prize winners in the field of economics, call it a Ponzi scheme and a means for criminal activities. "Bitcoin, it just seems like a scam," Mr. Trump said. He added that he wanted the dollar to be "the currency of the world". In the future, there will be a contradiction between regulation and individuals. As some cryptocurrencies are involved in terrorist attacks, governments will want to regulate the structure of cryptocurrencies. Meanwhile, the main standout for cryptocurrencies is the guarantee that users remain anonymous.
Futurists believe that by 2030, cryptocurrency will account for 25% of the national currency. This means that a significant part of the world will begin to believe in cryptocurrency as a method of transaction. It'll be more and more accepted by merchants and customers, and will continue to fluctuate in nature, which means that prices will continue to fluctuate, just like in the past few years.
MOHAMMAD TOWFIQUR RAHMAN KHAN
DEPARTMENT OF BANKING & INSURANCE
SESSION: 2016-17
