Cryptocurrencies: Impact on the Financial World

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September 28, 2021

Cryptocurrency, also called digital money, can be used to make payments for purchases made online. Like your regular money, there must be enough cryptocurrencies in circulation, it must be widely accepted as a means of payment, and it must be valued. With cryptocurrency, you don’t need to worry about banks or other third parties when making financial transactions. This is because cryptocurrency uses decentralized blockchain technology. Blockchain technology, the basis on which cryptocurrency is built, allows transactions to be made from an individual to a second individual without the need for a third-party agent. In addition, whatever transaction is made cannot be reversed.

History of Cryptocurrency

Just like everything else, cryptocurrency has a history. The first-ever cryptocurrency is Bitcoin, and it was designed by an anonymous group of persons called Satoshi Nakomoto. Currently, bitcoin is the most common type of cryptocurrency in the world. When bitcoin was created, electronic money can be transferred from one person to another without middlemen or third-party agents such as banks and financial institutions.

Did you know that before bitcoin was created, many failed attempts were made to create a cryptocurrency? But how was bitcoin created? Bitcoin was created through an electronic process referred to as mining. Unlike your usual mining, this electronic process involves using powerful computers to provide answers to complex problems. Sometimes, these complex problems take years to solve.

Interestingly, it was until 2011 that other types of cryptocurrencies were created. They were created by bitcoin experts who were noticing major loopholes in bitcoin. So, they decided to provide a solution by designing alternative coins, which were called altcoins for short. Altcoins were designed to make up in the area’s bitcoin was failing, like anonymity, speed, and security, among others. However, the first type of altcoins to be created is litecoin, and till today, it is second only to bitcoin.

Countries and Banks that Have Launched their Cryptocurrencies

Because of the massive success of cryptocurrencies, the government in different countries have been looking for ways to regulate electronic money just like traditional money. However, because cryptocurrency is built on blockchain technology, which doesn’t make room for third parties and is completely decentralized, it is almost impossible for the government of these countries to regulate it the way they want to. Instead of regulating the existing cryptocurrencies, the government of these countries interested in digital money has begun to create their cryptocurrency.

Currently, countries like Tunisia, Ecuador, Singapore, and Senegal. Interestingly, Ecuador was the first among these countries to roll out its cryptocurrency. Very soon, countries like Ukraine, Japan, Sweden, Palestine, and Estonia will join them.

Interestingly, the central banks of these countries are paying great attention to the resistance countries that have launched their cryptocurrency are facing. As different countries are beginning to roll out their cryptocurrency, many people are speculating that it will affect existing cryptocurrencies like Ethereum and Bitcoin. However, the price of Bitcoin rose from $5000 to $5800 even though China has been making moves against Bitcoin and other cryptocurrencies, a rise that came as a great surprise to speculators.

Even though few people will agree that cryptocurrency needs to be regulated, however, it will be hard for the general public to accept centralized cryptocurrency, which the government is regulating. Countries rolling out cryptocurrency can defeat this resistance by creating a regulatory body that is not controlled by the government, banks, or other financial institutions. Bitcoin and Ethereum are still doing well, especially with Japan approving Bitcoin as a legal payment method.

Final Thoughts

Cryptocurrency, especially Bitcoin, has risen over the past ten years to become a major force the world has to reckon with. The world now knows of a different currency type. Even though countries are beginning to roll out their cryptocurrency, we believe decentralized cryptocurrency is not going anywhere and will soon become a hot wave that will take over the world and all its financial transactions.

China has recently put a ban on all crypto-related transactions making it illegal to trade any coins. Bitcoin fell down more than 10% once the decision was announced and covered by the media. The consequences of this step are yet unknown and hard to predict, but it’s obivious this will affect everyone who has invested in crypto and might turn some heads away from China.

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