Introduction
History
On 3 January 2009, the bitcoin network came into operation. This is the world's first virtual currency (Cryptocurrency). This currency was invented by Satoshi Nakamoto, after the 2008 financial collapse to provide a better way of money transaction that does not require banking infrastructure. The identity of Satoshi Nakamoto is still not known.
Among all asset classes, Bitcoin has one of the most volatile trading histories in the world of finance. The first major price rally has come in 2010 when the value of bitcoin increases to $0.08 from $0.0008, that is100x return. This event has attracted media houses and big investors. They got the feeling this asset class can give good profits with good volatility risk as since then many crashes and rallies have been witnessed by the investor.
To name a few investors who became millionaires, my favorite is Copper Turley, a 25-year-old boy has invested early in Bitcoin (Market Price-$2000) and Etherium (Market Price-$100) in 2017. At that time, he was in college and earned some money from doing part-time jobs, and invested a few hundred dollars in crypto. With that investments, now he is a millionaire. This is a perfect example that proves the potential of cryptocurrency which can make a normal man a Millionaire. Some of the big names in crypto industries who have made huge profits are:
Winklevoss brothers ($ 6 Billion), Michael Saylor ($ 2.3 Billion), Matthew Roszak ($ 1.5 Billion), Tim Draper ($ 1.5 Billion)
Some of the major rallies associated with crashes of bitcoin can be summaries as follows:
· 2010- $0.0008 to $0.08 (100X return)
· 2011- $1 to $32 (32X return)
· 2013- $13.40 to $1156 ( Around 86X return)
· 2017- $ 1000 to $20,089 ( Around 20X return)
· 2010 to 2021- $.0008 to $64800 - (Around 81,000,000X return)
With this mind-blowing growth, Bitcoin has made a new all-time high price of $64800 in 2021. Due to these incidents, more users are interested in cryptocurrencies. However, according to various surveys, only around 4% of the world population holds this asset class. This survey report confirmed that we are still in the early stage of adaptation and have the huge potential to grow in much bigger ways. Now Bitcoin slowly getting popularise as a store of value and a hedge against inflation. Very recently, El Salvador's Congress on June 9, 2021, approved Bukele's proposal to embrace the cryptocurrency, making El Salvador is the first country in the world to adopt bitcoin as legal tender.
What Is Cryptocurrency & how it works?
The currency which uses encryption to verify its transaction know as cryptocurrency. It involves advanced coding in storing and transmitting data between wallets and public ledgers. Due to the presence of the encryption process, it became secure and safe. The term encryption means converting the data or information into codes to prevent unauthorized access.
Cryptocurrency is a digital payment that works on peer to peer system that enables anyone from anywhere to send and receive payment without relying on bank transaction verification. It is a great replacement for physical money as they are no need for the physical exchange of currency. When funds get a transfer, transaction details get stored in a public ledger that makes this purely digital form of currency. But the individual fund has to store on digital wallets.
How Secure Is Cryptocurrency?
Blockchain technology has been used for Cryptocurrencies creation. Cryptocurrency transactions are used to record on blocks with details of transaction time and each block is interconnected with many such blocks, that is the reason why we used to call it blockchain technology. And this makes this technology very difficult to hack, change or cheat by hackers. In addition, transactions require a two-factor authentication process that also makes them more secure. Blockchain is a digital transaction ledger that duplicates the transaction details across the distributed ledger.
Now with the knowledge of blockchain and functionality of Cryptocurrency, let us now know the major misconception about this asset as this is very important to know before investing in this asset class.
Is Cryptocurrency Promote Illegal Activity?
As cryptocurrency is very new to maximum people, so very easy to get confused with its credibility about its uses in illegal activity. Let's have some insight into this as follows in Question answer style:
Q.1. Maximum transaction of cryptocurrency involved in illegal activity?
Only 1% of total transactions is related to illegal activity and there is a continuous decline in illegal activity through this asset. Around 99 percent of cryptocurrency transactions are performed through centralized exchanges only.
According to the Department of Economic and Social Affairs, UN, Money laundering of around $1.6 trillion per year, or 2.7% of global GDP through the traditional system or cash. They have shown their concern for developing a more transparent system so that we can reduce this value. or cash. They have shown their concern for developing a more transparent system so that we can reduce this value.
Q.2. Difficult to investigate illegal activity which is funded by Cryptocurrency?
Crypto is easier to track because searchable public databases (blockchains) already exist for the majority of transactions. Even the Department of Justice says so. more information than a case involving cash, including the date, time, and amount of the transaction, as well as the type of crypto used, the wallet address involved, and the unique transaction identifier (hash value).
The investigation will be very fast in case of cryptocurrency involvement as all data is available open, anyone can see the details like wallet address, name of the crypto, date & time, transaction unique Id. To find this kind of detail is very difficult and time taking in case of cash involvement.
After having a very good introduction to cryptocurrency, let us know discover the six most important reasons for investing in cryptocurrencies.
Are you ready? Here we go!
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