Cryptocurrency: The Fintech Disruptor

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Block chains, side chains, mines – terminologies in the clandestine world of cryptocurrency continue to accumulate. Although it seems unreasonable to introduce new financial conditions in an already complex financial world, crypto-currencies offer an indispensable solution to one of the inconveniences of the current money market: the security of transactions in a digital world. Cryptocurrency is a decisive and disruptive innovation in the rapidly evolving world of end-tech, a relevant answer to the need for a secure means of exchange in the era of virtual transactions. At a time when transactions are just numbers, the cryptocurrency offers to do just that!

In its most rudimentary form, cryptocurrency is proof of concept for an alternative virtual currency that promises secure anonymous transactions via a peer-to-peer online mesh network. The improper term is more a property than the real currency. Unlike common currency, cryptocurrency models operate without a central authority as a decentralized digital mechanism. In a distributed cryptocurrency mechanism, the money is issued, managed and approved by the community collective peer network – whose ongoing activity is known as mining on a homologous machine. Successful miners also receive coins in appreciation of their time and resources. Once used, the transaction information is broadcast on a blockchain of the network under a public key, which prevents each piece from being spent twice by the same user. The blockchain can be considered as the register of the cash register. The coins are secured behind a digital wallet protected by a password representing the user.

The provision of coins in the world of digital currency is decided in advance, without any manipulation, by any natural person, organization, government entity and financial institution. The cryptocurrency system is known for its speed, trading transactions on digital portfolios can materialize funds in minutes, compared to the traditional banking system. It is also largely irreversible by design, further reinforcing the idea of ​​anonymity and eliminating any additional possibility of recovering money back to its original owner. Unfortunately, the main features – speed, security and anonymity – have also made cryptocurrency the transaction mode used for many illegal transactions.

Just like the money market in the real world, exchange rates fluctuate in the ecosystem of digital coins. Due to the finite amount of coins, the increase in money demand leads to an increase in coin value. Bitcoin is the largest and most successful cryptocurrency to date, with a market capitalization of $ 15.3 billion, capturing 37.6% of the market and currently priced at $ 8,997.31. Bitcoin hit the currency market in December 2017 by trading at $ 19,783.21 a piece, before facing the sharp fall of 2018. The fall is partly due to the rise of alternative digital coins such as as Ethereum, NPCcoin, Ripple, EOS, Litecoin and MintChip.

Due to hard-coded limits on their offer, crypto-currencies are deemed to follow the same economic principles as gold – the price is determined by the limited supply and demand fluctuations. With constant fluctuations in exchange rates, their sustainability remains to be demonstrated. As a result, investment in virtual currencies is more speculative at the moment than an ordinary money market.

As a result of the industrial revolution, this digital currency is an indispensable element of technological disruption. For an occasional observer, this ascent can seem exciting, threatening and mysterious at the same time. Some economists remain skeptical, others see it as a flash revolution in the monetary sector. Conservatively, digital coins will replace about a quarter of national currencies in developed countries by 2030. This has already created a new asset class parallel to the traditional global economy and a new one. investment vehicles will come from cryptofinance in the coming years. Recently, Bitcoin may have dived to highlight other crypto-currencies. But this does not signal any cryptocurrency crash itself. Some financial advisers focus on governments & # 39; role in the repression of the clandestine world to regulate the central governance mechanism, others insist that the current free flow continues. The more popular cryptocurrencies are, the more they attract study and regulation, a common paradox that darkens the digital score and erodes the primary purpose of its existence. Whatever the case may be, the lack of intermediaries and monitoring makes it particularly attractive to investors and brings about a drastic change in daily trading. Even the International Monetary Fund (IMF) fears that cryptocurrencies will move central banks and international banks in the near future. After 2030, regular trade will be dominated by the cryptographic supply chain, which will offer less friction and more economic value between technologically savvy buyers and sellers.

If the cryptocurrency aspires to become an essential element of the existing financial system, it will have to meet very different financial, regulatory and societal criteria. It will have to be protected from hackers, friendly and strongly safeguarded to offer its fundamental advantage to the traditional monetary system. It should preserve the anonymity of users without being a channel of money laundering, tax evasion and Internet fraud. As these systems are indispensable for the digital system, it will take a few more years to understand whether cryptocurrency will be able to compete with the real-world currency. Although this is likely to happen, the success (or lack of success) of cryptocurrency in solving problems will determine the fortunes of the monetary system in the days to come.


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