Digital currency: is cryptocurrency the next big thing? | The new times

The cryptocurrency, better known as bitcoin, has been buzzing in the media lately. Even though only a few people know about it, it could be the next big thing in the near future.

According to Nigel Green, CEO and founder of one of the largest independent financial advisory, asset management and fintech organizations, deVere Group, Tanzania and Paraguay or Mexico must adopt Bitcoin as legal tender before the end of 2022.

This comes after the Central African Republic (CAR) became the first African country to adopt Bitcoin as its official currency, behind El Salvador. He says this is just the beginning.

Understanding Cryptocurrency

Cryptocurrency is generally a medium of exchange, like the US dollar, but it is digital and uses encryption to control the production of monetary units and verify the transfer of funds.

It is a digital currency in which transactions are validated and records are maintained by a decentralized system using cryptography rather than a centralized authority.

Cryptocurrency is generally a medium of exchange, like the US dollar, but digital. Sharp picture.

When a sender encrypts/hides a message using some type of key and algorithm, the receiver decrypts it to generate the original message, this is called cryptography. Cryptography is used to protect virtual currency against counterfeiting and double spending.

It is said to have been invented in 2008 by an unknown person or persons using the name of Satoshi Nakamoto, and it was first used in 2009. Virtual currency has become extremely popular in the years 2016-2020. In the first block, a Chinese company would be the largest private bitcoin owner.

All bitcoins are controlled by private keys whose owners own the key-secured bitcoin, according to River Financial, a platform for buying, selling and using bitcoins in the United States. Possession of bitcoin, even in large quantities, does not confer control over the bitcoin network.

According to them, the three richest bitcoin addresses own more than 575,000 BTC, and Microstrategy owns more bitcoin than any other publicly traded company.

A BTC transaction is a transfer of bitcoins from one address to another. The sender must sign the transaction because its validity depends solely on him. Pieces of bitcoin, called unspent transaction outputs (UTXO), are all associated with an address, which is managed by the bitcoin owner rather than accounts.

All bitcoin transactions are posted to the memory pool, a smaller database of unconfirmed or pending transactions, and are only considered confirmed when added to a block by a miner.

Cryptocurrency mining is a competitive process that uses the proof-of-work method to verify and add new transactions to the blockchain. It is a method in which one part (the prover) solves an arbitrary mathematical puzzle to prove to the others (the verifiers) that a certain amount of a specific computational effort has been expended.

As a result, the winner (miner) receives part of the money and/or transaction fees.

Why cryptocurrency rather than local currency?

A bitcoin transaction is praised to be faster because once the network confirms the block containing the transaction, it is fully settled and the funds are ready to use within minutes, even if the transaction is over a considerable distance.

Bitcoin transactions are also cheaper, and anyone with a computer or smartphone and an internet connection can access them. Setting up a bitcoin wallet is faster than opening a bank account and it is more secure because transactions and funds cannot be signed or accessed without the owner’s private key.

Cryptocurrency wallets are also preferred for maintaining a high level of privacy and transparency since transactions take place on the publicly distributed blockchain ledger. Bitcoin cryptocurrencies are seen by many as a hedge against inflation. Government-issued currencies typically lose value over time due to central bank money creation, however, bitcoin defies depreciation due to its fixed/limited supply and decentralization.

This could be particularly beneficial for low-income countries, which have long suffered from weak currencies that are extremely sensitive to market fluctuations and inflation.

On the other hand, cybersecurity vulnerabilities, price volatility due to a lack of intrinsic value, scalability, and a lack of regulation and supervision by federal governments are all worries that keep investors away from Bitcoin. Nonetheless, cryptocurrencies may be here to stay, despite these potential barriers to mass adoption.

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Sylvia B. Polson