Crypto Currency – Future is the Present !

Imagine your payments deteriorating because of the Non-Performing Assets (NPAs) your bank has built up over time. You pay your taxes honestly but still end up relying on someone else (here - the bank) to confirm when you spend or not, that's where cryptocurrency comes in.
Last year, the Covid 19 pandemic banished the global 'Fiat Currency'. Paper currency used to be backed by gold in the mainstream monetary system (pegging the currency), but the trend changed in the early 1970s.

The Forex Reserve Index is measured in USD throughout, yet US Federal Banks ranks very low. Why?

Because the US government still believes in the supremacy of gold!

Now this process may be lax, but it is not a bluff either. A ₹100 note today is not enough to exchange for what our elders and their elders could've purchased. Today, a simple meal at McDonald's consisting of 02 McAloo Tikki and a large French Fries, costs ₹293 (excluding GST) and most of our parents paid ₹30-40 as school fees.

According to the basic rule of economics, ‘Fiat Currency’ is devalued over time (with some exceptions), therefore, people used to invest in gold, real estate and the stock market. The stock market has reached its saturation point and Real Estate runs low on return on investment (ROI), so now people have begun to perceive “cryptocurrency as a good store of value that is unaffected by a country's mainstream economy (inflation)”.

Companies like “Tesla”, “Paypal”, etc. have started investing in Bitcoin so that their invested money does not get devalued over time. In the field of investing, cryptocurrency has also turned out to be an ideal portfolio diversifier these days. This is by and large under the umbrella of ‘Blockchain Technology’, which decentralises or removes intermediaries to exchange financial value.

The two individuals/stakeholders are no longer dependent on a mediating entity for the exchange of financial value.

During the Global Financial Crisis of 2007-09, the whole world suffered in the name of a certain Financial Ecosystem (Federal Reserve System) aka “The Housing Market Bubble”. This was the time when a putative pseudonym “Satoshi Nakamoto” developed bitcoin, wrote the bitcoin whitepaper, and created and deployed his original reference implementation.

He provided an isolated monetary system where your money should belong to you, not some intermediary entity. Governments are now looking forward to “Central Bank Digital Currencies” (CBDCs) all over the world to have their presence there too. CBDCs are expected to replace the current fiat currency based ecosystem to make it more transparent for them as well.

According to an report by International Monetary Fund (IMF), money laundering & terrorist financing can threaten a country's economic stability. For this reason, the IMF has become increasingly involved in recent years in supporting and promoting the member countries' efforts to combat the same. In contrast, the peer-to-peer mechanism of cryptocurrency makes it transparent and traceable, which can choke off terror financing in the region.

‘As of April 2021, there are over 10,000 different types of cryptocurrencies’. The different types of crypto generally fall into one of two categories: “Coins & Tokens”. Encrypted coins and tokens can fall under the heading of crypto. And in general, they can be listed into two types of cryptocurrencies: “Alternative Cryptocurrency Coins (Altcoins) or tokens”, which generally refer to any coins that are not bitcoins.

Bitcoin is a popular digital currency created by computational solutions to complicated mathematical problems. It operates independently of a central bank or government entity (i.e., a government-backed financial authority).

Some altcoins include:- Peercoin, Litecoin, Dogecoin, Auroracoin, Named Coin.
In fact, the name ‘altcoin’ actually means ‘alternative to bitcoin’. Namecoin is considered to be the very first altcoin that was created in 2011. Like Bitcoin, most cryptocurrencies listed here have a limited supply of coins- to keep the balance in check and strengthen the perceived value. There is a set number of Bitcoins that can exist- 21 million, as decided by the creator(s) of Bitcoin, although some have yet to be mined. Once all 21 million are tapped (the number changes as new blocks are mined), that's it. The only way to bring in more is if the bitcoin protocol allows it.

Although most altcoins are built on the same basic framework as Bitcoin, many claim to be better versions of Bitcoin.

Each system may differ from the next, as they were created for different purposes and applications and are identified in different ways. However, some coins do not operate on the same open-source protocol as Bitcoin. For example, the following list of cryptocurrencies have their own separate systems and protocols created:- Ethereum, Ripple, Omni, Nxt, Waves, Counterparty.

Unlike altcoins, tokens are created and issued through a “Initial Coin Offering” or ICO, much like a stock offering. They can be represented as:- Value tokens (bitcoins), Security tokens (to protect your account) and Utility tokens (for specific uses). They are not meant to be used as money so much as to describe a function. “Like American dollars, they represent value, but are not of value themselves”. Tokens are a type of encryption and refer specifically to the long series of numbers and letters that represent the cryptocurrency used in a transaction, such as a money transfer or bill payment. In short, tokens cover a range of meanings.

For example, both Bitcoin and Ether (from Ethereum) are considered crypto-tokens.

POPULAR ONES :-

1. Bitcoin - Bitcoin is a type of digital currency; it is “cash for the internet”. More specifically, it is considered a cryptocurrency because cryptography facilitates the creation and transactions of Bitcoin. Possibly the “ Kleenex” or “ Coca Cola” of all cryptocurrencies, as its name is the best known and most closely associated with the cryptocurrency system. There are currently more than 18.5 million Bitcoin tokens in circulation, compared to a current cap of 21 million.

2. Bitcoin Cash - Introduced in 2017, Bitcoin Cash is one of the most popular types of cryptocurrency on the market. Its main difference with the original Bitcoin is its block size: 8MB. Compare that to the original Bitcoin’s block size of just 1MB.

What that means for users—faster processing speeds !

3. Litecoin - Litecoin is increasingly used in the same breath as Bitcoin, and it functions practically the same way. It was created in 2011 by “Charlie Lee”, a former Google employee. He designed it to improve on Bitcoin technology, with shorter transaction times, lower fees, more concentrated miners.

4. Ethereum - Unlike Bitcoin, Ethereum focuses not as much on digital currency as it does on decentralized applications (phone apps). It can be considered as an app store. The platform is looking to return control of apps to its original creators, and take away that control from middlemen (like Apple, for instance). The only person who can make changes to the app would be the original creator. The token used here is called Ether, which is used as currency by app developers and users.

WHY TO INVEST IN IT ?

• Portfolio Diversification -  Even if a particular market is in recession, the others must be invested for the net result to be profitable.

• Decentralisation is the key - With decentralised asset protection, there are no risks of interference from vested interests within the mechanism.

• Transparency - Blockchain Technology surpasses our traditional financial means in the aspect of traceability, which fiat currency frighteningly does not.

• Peer-to-peer Contact - Every transaction done online currently goes through multiple layers of banks and authorities, making it slower and even leading to cancellation. But with peer-to-peer contact, transactions will not only be fast and efficient, but also more secure.

IS CRYPTO CURRENCY SAFE ?

Yes, it is definitely safe and legal, if it were not, then why would Reserve Bank of India be interested in starting their own CDBC?
Along with portfolio diversification, you would get a long term investment that has already started delivering results.
The rest depends on one's financial knowledge. If the overall GDP is raised by such measures, the government will also get the confidence to act accordingly.
Since it is a decentralised peer-to-peer security that is not governed by anyone, the government cannot technically stop people from buying or selling cryptocurrency. As a dream to become an economic superpower, India needs to start adapting to it as soon as possible.

A WAY FORWARD :-

Valuing cryptocurrency only as currency will get you nowhere, that's what the anti-crypto people failed to understand. You have to understand that cryptocurrency is a value asset rather than a paper currency substitute. You need thousands or probably Lacs of rupees to buy it and using it for small transactions is not scalable. Tesla's $2.48 billion investment in Bitcoin is not to pay for their expenses, only to hold the value so that it multiplies in the future.

Comment below what you think about crypto currency ? 👇🏻

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