Can cryptocurrencies based on blockchaintechnology compete with government currencies? Although the facts are notalways obvious in Western countries, government currencies depend on governmentstability. In the long run, investing in cryptocurrencies is possible, but canit be used as a currency of the transaction? We are worth looking forward to.
What is cryptocurrency?
The so -called use of cryptography to castvirtual coins, cryptocurrencies are usually exchanged between people withvirtual wallets on decentralized computer networks. These transactions arepublicly recorded on distributed tampered and modified accounts calledblockchain. This open source framework can prevent coins from being copied anddo not need to verify transactions like a bank like a bank. Bitcoin was foundedin 2009 by Bitcoin, a software engineer, and is the most famous cryptocurrencyso far. Its total value sometimes exceeds $ 1 trillion. However, in recentyears, many other projects including the second popular Ethereum have surgedand operated in accordance with the same general principles.
Cryptocurrency users send funds betweendigital wallet addresses. Then record these transactions to the"block" and confirm it through the network. The blockchain does notrecord the real name or the actual address, only the transfer between thedigital wallets, thereby giving users a certain degree of anonymity. Somecryptocurrencies, such as Monero, claim to provide additional privacy. However,if you know the identity of the wallet owner, they can track theirtransactions.
Bitcoin "miners" earn coins byverifying transactions on the network. This process requires them to usecomputers to guess and check the trillions of possible solutions to solvemathematical issues, which is called "workload certificate". Manycryptocurrencies use this method, but some cryptocurrencies use theverification mechanism called "equity certificate". In the example ofBitcoin, a transaction block is added to the chain every ten minutes, and thenew Bitcoin is granted at this time. (The reward has steadily declined overtime.) The total supply of Bitcoin is 21 million, but not all cryptocurrencieshave such restrictions.
The price of Bitcoin and many othercryptocurrencies varies from global supply and demand. However, the value ofsome cryptocurrencies is fixed because they have other asset support, so theyare called "stablecoins". For example, the value of popular stablecurrency Tether and USD Coin is said to be $ 1 per coin, but the authoritiesclaim that the situation is not always the case.
How to confirm cryptocurrencytransactions?
Cryptocurrencies are composed of a point network,and each point has a list of all the transactions in the past. Any transmissionin the network is signed by the sender's private key, and then the broadcastmessage is sent to the network. After a certain time, it will be confirmed.Once the transaction is confirmed, it is fixed, and it is irrevocable orchanged in any case.
The work of miners in the network is toconfirm these transactions. The mining program was notified, marked and sentback to the network. Once confirmed, each node will add entries to theirdatabase, and it becomes part of the blockchain.
Can cryptocurrencies become mainstreamcurrencies?
Many people believe that cryptocurrenciescan become mainstream currencies. Most places are set up to be paid by debt andcredit card forms from merchants and customers. It is not important how theagreed balance is transferred. From the perspective of technologyimplementation, the current system relies on banks' centralized systems totransfer funds from customer accounts to merchant accounts. This can easilychange to the use of decentralized blockchain to transfer money from thecustomer's wallet to the merchant's wallet. You can get some cards from thecryptocurrency exchange to allow you to "pay with cryptocurrencies".However, it is actually selling cryptocurrencies to you with the current marketexchange rate of the US dollar and then paying it with it. This is usually nota good idea, because in addition to the total cost of the transaction itself,you must also pay the cryptocurrency to pay taxes to the US dollar. But this isjust a regulatory issue that can change. Both Salvador and the Chinese andAfrican Republic have set Bitcoin as official currencies, and the UnitedStates, China and Russia are researching or testing their own digitalcurrencies.
Perhaps they should not be one of themainstream reasons is one of the main reasons for their popularity, that is,privacy. Although the encrypted wallet is not open to someone's identity, ifthey are used for your daily shopping, you can know others according to theshopping model. For example, if I know that you and your spouse eat at aspecific restaurant around 7 pm on Friday, I can find all transactions to thatrestaurant before and after that time. These transactions are reasonable for twopeople. Considering these possibilities, it is easy to narrow the range -aslong as one or two detailed information about one person can be easily foundonline. Then you will know each transaction sent by that person, who they sendthem to, and how much they are currently in their accounts.
Is cryptocurrency be useful undernational emergency?
As far as natural disasters are concerned,it is not as useful as the current system. Like the current digital paymentsystem, it requires power supply and Internet connection. When those lack ofcash, cash is king. However, it may be useful in financial emergencies. If acountry's currency is trapped or restricted for some reason, citizens will haveother available transactions.
Where can cryptocurrencies be suitable forcreating currencies, especially in places with political uncertainty?
In recent years, the newly created newTariff Currency has exploded. Study these encrypted token terms is tokeneconomics, which brings many proposals and implementation of many new economicsystems that have never been tried before. The value of most tokens has neverincreased to nearly one beauty. But some are indeed successful and may becomethe next big event, such as Bitcoin or Ethereum.
Unlike the current currency controlled bycentral institutions such as the United States, cryptocurrencies are controlledby defining their code. This code can be changed to provide updates and newfeatures. For example, Ethereum recently switched to proof of stake, butprovided that most node operators agreed to change the code they used.Therefore, if a country is affected by political instability, this may lead toproblems with the traditional central authorities, and constantly changingpolitical leaders may not make any changes to cryptocurrencies -especially ifit is also used internationally, it is also used internationally. And there isa node operator border outside their own country.
Cryptocurrencies have a strongattraction among minority groups and young people.
Americans also regard cryptocurrencies as ameans to create a more fair economy.
Among the people who were investigated, theAmerican Black (31%) and the Spanish Americans (38%) were more likely to havecryptocurrencies than White (16%), about one-third (37%) 18-34 years oldRegistration voters have cryptocurrencies. It is important that more than halfof adults (56%) said that financial innovation relying on bank/financialintermediaries (such as cryptocurrencies) will create a more fair economy. Thispublic opinion survey shows that many people believe that cryptocurrencies area way to a fair financial system to the United States, and decision makersshould realize this when considering the supervision of cryptocurrencies intheir legislative agenda.
What are the future of cryptocurrencies?
It is necessary to predict the future sceneof cryptocurrencies, consider what happened in the past and clarify thatseveral key points may be useful. First, the world of blockchain consists ofcryptocurrencies and crypto derivatives. For example, Bitcoin is acryptocurrency, while the stablecoin Tether and Terrausd are cryptocurrencyderivatives. These are "derivatives" from cryptocurrencies and/orlinked currencies that are widely recognized and concentrated, such as the USdollar. In short, financial investors hand over the US dollar to the companyand obtain derivatives as returns. The company converted the US dollar withcryptocurrencies and lent it to global borrowers. At the same time, the companypromised financial investors to convert derivatives into a fixed number ofgiven cryptocurrencies on demand, which may be linked to the US dollar, or thedollar is backing.
As a result, if you buy Bitcoin or othercryptocurrencies, your win -win depends on the exchange rate of cryptocurrenciesin your investment portfolio. However, if you buy derivatives, you may findthat it does not really get enough cryptocurrency support, or at least it canbe said that the US dollar exchange guarantee is full of loopholes. If so, thederivative products are almost worthless. This is the situation of severalcryptocurrency derivatives that have occurred over the past few months.Companies that issue such products are very active in the market and lead tothe fluctuations in the target assets, especially if they promise to provideconsiderable returns, which will increase the demand for cryptocurrencies andcrypto derivatives. If the mortgage of derivatives is insufficient, investorswill be scared away during economic downturn.
The second key point is thatcryptocurrencies are currently considered to be a speculative tool and a wealthstorage method, not a payment method for ordinary transactions. For example,more than 60% of the total Bitcoin in circulation is stored in each account ("wallet"),and the number of Bitcoin exceeds 100. In addition to adjusting the investmentportfolio, it rarely trades in the market: 2022 in 2022: in 2022 In late July,only about 250,000 Bitcoin trades daily, and it is likely that only a smallpart of it is related to commercial transactions. In addition, cryptocurrencyholders seem to have a long -term vision. For example, "shrimp" and"whale" (accounts with less than 1 and more than 1,000 bitcoinrespectively) use the recent selling a large number of buying.
The three preliminary conclusions are asfollows: (1) The long -term practice of typical cryptocurrency holders showsthat cryptocurrency projects are not easily killed and survived in severefluctuations; (2) fluctuations are driven by encrypted derivatives. The eventwas amplified due to the relatively few cryptocurrencies in the market; (3) thecollapse of the cryptocurrency market in 2022 hit the world of derivatives. Itmay be possible Cryptocurrency investors provide opportunities to eliminate themain sources of fluctuations.
The future of cryptocurrencies
Over the years, people have observed thatcryptocurrencies have high volatility and composition, especially Bitcoin. Thisfluctuation mainly depends on the decision of U.S. financial regulatory agenciesin Bitcoin. However, the future of Bitcoin can be summarized as follows--
As it is becoming more and more popular,Bitcoin users predict that by 2024, almost 94% of different types of Bitcoinwill be released.
Snapchat's first investor Jeremy Liew predictsthat Bitcoin will reach an amazing $ 500,000 by 2030.
The popularity of this form of currency isexpected to grow in index level because it is decentralized, safe andanonymous.
A large number of proficient individualsand companies support the decision to use different forms of cryptocurrenciesto clearly indicate that the future of Bitcoin or the entire cryptocurrencywill be bright.
However, it is predicted that the profitsobtained by the creation of new blocks will be reduced to negligible. Cryptocurrenciesare only in the initial stage, so it is now determined that whethercryptocurrencies will become the future of currency or Bitcoin will have anyimpact on the next few years.
The above content simply discusses thefuture trends and trends of cryptocurrencies. Cryptocurrencies have caught thepublic's attention, but at present, cryptocurrencies are not feasible tradingcurrencies. The anonymity provided on the surface makes them attractive toillegal and illegal transactions, but from a social perspective, this is not adesirable result. At present, the main attraction of cryptocurrencies is as aspeculative asset, although it shows great volatility. In the future, cancryptocurrencies become mainstream currencies? It may first solve the huge powerdemand of cryptocurrency mining to avoid environmental consequences.