Why Has Cryptocurrency Become Such a Buzz In The Investment World?
Bitcoin accounts for 40% of the total value of all cryptocurrencies today.
The city of Miami was known for fighting corporate finance or so when 12,000 people wore suits, festival clothes, and whale-shaped hats at the world's largest Bitcoin conference, and crypto gurus such as Twitter president Jack Dorsey praised those striving for wealth and freedom, and crowds erupted when Salvadoran President Najib Bukele announced plans to launch a legal tender for Bitcoin.
After reaching its 13th year, Bitcoin has become a sensation in the investment world. In contrast, regardless of Bukele's enthusiasm, it remains an expensive and unused means of exchange, and in the meantime, a range of smaller cryptocurrencies flow, accounting for 40% of the total value of all cryptocurrencies today, compared to about 70% last January. Elon Musk, an electric car billionaire whose tweets appear to affect cryptocurrency markets, said he prefers smaller competitors for the time being.
In its report, the Economist said that many of the currencies listed on the stock exchanges are "symbolic currencies", which can become instruments of speculation, but, unlike "coins", do not aspire to embrace the full function of money. The purpose of "security" tokens, such as stocks and bonds, is to invest, representing the ownership of companies or other assets registered in the book of accounts.
At the same time, "public utility" tokens are tradable balances that can be purchased and used for services. For example, cryptocurrency exchanges sell tokens used by gamblers to pay transaction fees.
This only leads to a market capitalization of more than $100 million for about 110 of the 776 coins, and the more serious competitors are divided into two categories, with Bitcoin Copy seeking to fix cryptocurrency defects into a payment method, while "ether copies" aim to perform new jobs.
Obstacles
One problem with bitcoin is its volatility: within a few hours on May 19, for example, its value fell by 30%, and to avoid such fluctuations, the so-called "stable currencies" tracked government currencies instead.
The newspaper added that other copies are trying to fix problems that are shifting around Bitcoin privacy, and since all bitcoin transactions are recorded on the blockchain public database, they have an impact.
On July 7, U.S. officials said they recovered a $2.3 million ransom paid in Bitcoin to hackers who shut down Colonial Pipeline last May after discovering the virtual wallet they used. Some coins try to hide the identity of the owner as much as possible using concealment technology, for example, Monero tries to prevent flows from being linked to a fixed identity, tracking funds, or controlling the size of the transaction.
Other versions are still trying to make payment processing cheaper and faster, and to ensure the legitimacy of transactions without relying on a central authority; Bitcoin relies on a "proof of work" protocol, where "metallers" compete to validate transactions by solving time-consuming digital problems.
However, the way bitcoin is designed makes it able to handle only about 7 transactions per second, so the Litecoin creator modified the algorithm so that new groups are often processed. In contrast, the supply of dogecoin, which was developed as a joke, remains unconditional.
Stable or encrypted currencies?
For every defect that the copy tries to fix, the desired features of Bitcoin seem to be lost, for example, stable currencies require users to trust both the source (which must keep fixed cash in reserve) and the government, undermining the original anarchist targets of cryptocurrencies; last February, new York authorities fined tether for lying about its Dollar stock.
Major stock exchanges have written off the ultra-private Currency Munro, fearing possible money laundering. Meanwhile, the quota proof system encourages currency storage and liquidity reduction, and these trade-offs may be the reason why none of the copies have been able to outperform Bitcoin, according to analysts at brave new coin research firm, alternative actions such as activity on GitHub, a platform used by programmers to collaborate on projects, show that Bitcoin remains uniquely popular.
The newspaper noted that the threat instead comes from smarter blockchain currencies that can make more than just recording payments, for example, Ethereum, which hosts Ethereum, can host Ethereum. The second most valuable cryptocurrency - the use of automated software that can transfer money between portfolios only after a particular event, ether, and its copies have become central to emerging decentralized financing, where "smart contracts" simulate complex financial transactions such as loans or Insurance, without the need for a reliable broker.
According to estimates by the data company Chainalysis over the past 12 months, the emerging decentralized finance industry has managed to lead 40% of ether transactions, up 7% from the previous period, with about 62% deposited. $1 billion in the capital in its applications, decentralized financing remains limited, but it is growing rapidly, while Bitcoin, whose Blockchain cannot operate with smart contracts, lacks sufficient catch-up equipment, and makes bitcoin's advantage and scarcity likely attractive as an asset. Monopoly, however, maybe just a failed compensation.
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