Cryptocurrency, A New Era In World Economics

Are we creating a digital world if we continue to cling to traditional methods of payment? The digitalization of the world and the recent widespread of the deadly virus demands an evolution in world economics, i.e. contactless transactions. And what’s better than digital money? Cryptocurrency, Satoshi Nakamoto took the market by storm in early 2009 by releasing Bitcoins(a form of cryptocurrency) to the public. Despite their fame and followers, cryptocurrencies have been marked illegal in many countries. But before learning about why they are not put into use in this modern era we need to gain a little insight into cryptocurrency.

What is Cryptocurrency?

All this hype about Bitcoins will be deemed meaningless without the proper knowledge about cryptocurrencies, their origin, and their use. The 2008 financial crisis led to the emergence of these currencies and it has been in the talks since then.

A cryptocurrency is a form of digital money that can be used in place of traditional money to avoid any go-between. [1]

But a question arises now that how are cryptocurrencies created? We mint money but creating a cryptocurrency is far more complex. To put it in simple words we can say that they are generated using code. The fabrication of these coins is done using Blockchain, A decentralized and distributed ledger technology that manages and stores information regarding transactions.

What is the worth of Cryptocurrencies? Is it worth investing in them?

This modern currency has started a flair on the market. Investors are in an urge to know the real worth of cryptocurrencies. A quick flashback to the past will briefly give an idea about their market value. The most valuable and well-known cryptocurrency is Bitcoin. A sneak peeks into the history of Bitcoins encapsulates the whole scenario. Bitcoins started at the price of 0.30$ in 2011 and have a current estimation of $46,482. Looking at its worth it must be tempting to not give in to this upward trend but despite those dollar signs, investing in Bitcoin is considered risky. It is considered a volatile investment as in 2018 this industry faced a hard time. The value of Bitcoin dropped to $3,400 in that year whereas they were earlier estimated at $19,783.06.

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What are the dangers involved in investing in Cryptocurrency?

To have a clear understanding of whether or not one should invest in Bitcoin we should first know the pros and cons of it.  In this article, we have compiled a list of vulnerabilities that come with this investment.

1. Cryptocurrencies lack Legal Protection 

These currencies receive no support from the government, unlike other currencies. Thus in case of any crisis, your investment will go in vain due to a lack of legal protection. 

Cryptocurrencies are subjected to hacking and constant changes and these pose a great threat. These currencies are saved in a digital wallet and will go out of the market in case of a company  shutdown or the worst scenario of Cryptojacking

2. Cryptocurrencies are subject to constant changes 

The value of cryptocurrency keeps on changing every hour and they are highly unpredictable. An investment of millions will turn into ashes in a flick of a second. Unlike the share market,  it is impossible to determine when and how the value of a bitcoin will vary. 

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This brings the question to another vertical. Getting refunds after making a transaction in cryptocurrency is a tough call. As the value of these currencies can change at any moment there is no fixed method of calculating refunds. Therefore no individual or company will be able to assure you a fixed refund amount after you have invested. While investing be aware of frauds who guarantee big returns, assure refunds, claims about the company that are not very clear.

3. Cryptojacking

The emergence of cryptojacking has given scammers a golden opportunity to ruin people of their assets. This method is known as ‘mining of cryptocurrency’ and is famous among hackers and allows them to get their hands on cryptocurrencies for free. [2]

This act of malice can be done in two sneaky ways.

  • Scammers either make the victim load the crypto mining code into their computers by sending a phishing email that looks legitimate. This way the code establishes and runs itself in the background leading to automatic mining of the currency.
  • Another method is by injecting infected code in a website that will appear as pop-up ads on various sites. This way the code starts working automatically without leaving any trace behind. Once the victim clicks on these pop-up ads or infected sites the code starts running complex mathematical problems to transfer all the data to the hacker. 
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This information gives us an insight into how risky investing in cryptocurrency can be.  If one can play safely in the field there are chances of making humongous profits but one wrong step can take away from you all your hard earnings. This leads us to another question,  ‘Why is cryptocurrency illegal in some countries?’

4. Cryptocurrency and the Countries

 Cryptocurrency has been the talk of the town for a while now. The sudden emergence of this highly unpredictable yet fascinating currency has left investors and analysts in doubt. The government of different countries is dwelling with the thought that whether it is safe to allow the use of this currency in their respective countries. 

Digital currency has received a positive response from countries like the United States,  Australia,  Canada,  United Kingdom, and Germany. But countries like India, China, Vietnam, and Russia are showing no signs of recognizing this currency and legalizing its use.

Final Thoughts:

Digital money and Cryptocurrency are a trend now. This has led to a dilemma among all. It is getting hard for people to overlook the returns in case of profits but the threats that it involves is even higher. The future of this trend depends on its ability to evolve. If this industry shows a turnaround and proves to be a secure breeding ground then it may have a chance of reserving a permanent place in World Economics. But a question arises here, ‘Will Cryptocurrency forever replace Traditional Transaction methods?’

2 Comments

  1. Never knew this concept of contactless money transaction exists.Thanks for enlightening us shreya. Keep up the good job!

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