A cryptocurrency is a virtual fund that
uses cryptographic algorithms to transfer funds across parties and
keeping them secure. Cryptographic forms of money utilize decentralised
control instead of centralised control by an entity or organisation. The decentralisation
works through blockchain technology (a public transaction database, functioning
as a distributed ledger)
difficult to counterfeit because of cryptography being a security feature. It
can’t be issued by any central organisation, rendering it safe from government
The transfer funds with cryptocurrency is easy. The funds are transferred
using public and private keys for security. Minimal processing fees is charged, which helps users to avoid the huge costs charged by financial institutions for remittance.
Although, since cryptocurrencies
are digital and no a central vault in place, the digital balances can be
wiped out by an unforeseen event such as a crash or hack. The prices of cryptocurrency
keep fluctuating since the pricing is solely based on forces of demand and
There are various factors
involved with using money such as future value, fraud, and volatility. Cryptocurrencies
are cheap in terms transactions compared to the fiat money. Cryptocurrency has
a very low inflation rate of 4%. Also, the cryptocurrency works in such a way that
the inflation rate will be below the inflation rate of USD(2%) in a few years.
Meaning, digital currency is better than fiat money in terms of transactions
costs and will have lower inflated rate than national currency.The supply of money is
limited and can’t be increased beyond the limit. Most of the countries mint trillions of
currency units every year (dollars, euros, rupees, yen etc.). Governments can’t
resist the urge to print money. Blockchains can. They provide better market
information, therefore less severe business cycles. With a constrained money supply,
the production plans would become much better coordination wise with the plans
Nakamoto published a paper in October 2008 on metzdowd.com explaining
cryptocurrency, Bitcoin. It was known as “Bitcoin: A Peer-to-Peer
Electronic Cash System”. He was the one who launched the network and the
first few digital coins of cryptocurrency, known as bitcoins. He claimed
that he wrote the code back in 2007.He created a website called
bitcoin.org and continued to working with other coders on the software until
August 2010. During that time, he transferred the control of the source
code and network alert key to Gavin Andresen, and many related domains to
many key members of the bitcoin community, and stopped working on the project. The public blockchain log
shows that Nakamoto’s addresses contain 1,000,000 bitcoins. As of 16 January 2018,
this is roughly worth 19 billion USD making him the 44th richest person in the
world. The 2008 economic crisis became an important date
in the events of world economy because it brought a truly necessary eye-opener
for the insensitive conduct of the people associated with the finance and
housing industry. This saw the rise of an anonymous person/entity namely Satoshi
Nakamoto (it is still not known if it was an individual or an organisation, the
identity is still not known). He wrote a white paper in 2009 explaining the, technology
and code for the use of blockchain. He also invented Bitcoin, the first
cryptocurrency to be invented.Nakamoto’s
invention was a foundational innovation. Blockchain challenges to replace all
forms centrally controlled systems with a decentralized, peer-to-peer, and open
source trust protocol.
When a transaction is pending,
it is unconfirmed. After it is confirmed, it is no longer forgeable/can’t be
reversed, it is part of an uneditable record of historical transactions: of the
have the ability to confirm transactions. It is their job to do so in the cryptocurrency-network.
They stamp transactions, as legit transfers and broadcast them in the network.
After it is confirmed by a miner, every node has to add the transfer its
work, the miners get paid with a token of the respective form of cryptocurrency.
A miner’s work is the most important part of cryptocurrency-networkSupply/Demand
is the only economic law that has direct affect on the price of cryptocurrencies.
has a maximum of 21 million units, divisible 100 million times. Even if 1
billion people out of the 7 billion were to adopt Bitcoin, the units would not get
acquired by each of them which is why it has a significant price tag. Since the
supply is limited, people pay more to get the cryptocurrency.The
cryptocurrency market is dirty but it does not change the fact that it is here
to. People buy cryptocurrencies to protect themselves against the devaluation
of their national currency. Asia is a huge market for cryptocurrency transfers.
RBI’s postion on cryptocurrencies is pretty clear as of now. They
don’t see it as a form of legal currency.
stated five major risks of trading of cryptocurrencies:
1. Being in electronic format, cryptocurrencies are more prone to risk of
hacking, viruses etc. 2. Lack of a central organisation to regulate the transfers
or to go to for redressal of grievances. 3. No underlying of asset for the digital currency, making
its value speculative. 4. Exchanges are sparsely located throughout the world,
making it difficult for law enforcement as multiple jurisdictions would be
there. 5. Cryptocurrencies may influence the user to engage in illegal
activities since the digital currency, can easily be used anonymously for
illegal activities.Fiat money
is just a legal tender which holds value simply because governments command it.
However, if we investigate the course of history; again, and again, we see
states fizzle, governments fall, and their cash swell to nothing. This isn’t by
botch, but by design.
are political in nature because no government can assert control on them. All
other forms of wealth can be stolen/extorted from a person; cryptocurrencies
can’t be stolen because of the cryptographic algorithms that they use for
the recent demonetisation of largest bank notes in India, the war on cash is evident.
This will be a war for monetary control of the economy by both governments and
banks. This isn’t for our wellbeing or security, it is to for the theft of our assets/wealth,
and the continued enslavement to banking and political interest of the government.To
capture cryptocurrencies, governments need to auction off the cryptocurrency
payment system to be regulated by using force and power. Cryptocurrency
is flawed in terms of privacy that should scare off orthodoxical people and privacy
advocates alike. However, these same flaws make cryptocurrency insanely appealing
to the financial world. The transparency of blockchain offers the idea of a
regulated and systematic world of digital currencies. Through implementing such
a system, governments would lose monetary control on the economy. It is plain
and simple economics which will help cryptocurrencies to win against fiat
fresh $100 bills are acknowledged everywhere on the planet since it is the
financial dominion of the U.S. dollar. However, there is nothing in the dollar
bills themselves that that have genuine value; only that the following
individual who understands that bill will realize that it is worth $100The
incidence of one individual spending a cryptocurrency balance more than once is
a huge concern for everyone. The blockchain doesn’t prevent double-spending;
instead, all transactions posted to the blockchain are verified and protected
through a confirmation process. Once it is onfirmed, it becomes irreversible
and posted publicly.
Sooner or later the cryptocurrency will start ripping up economies and it’s
only a matter of time before that happens. India should capitalise on the
position and move ahead with legalising cryptocurrency as it would have a
direct effect on the increase of GDP of the country. Each and every transaction
would be accounted for and no fraudulent printing of money would occur. This
would be a sure shot of way of curbing the problem of black money.