DIGITAL CURRENCY
A digital currency is a form of payment that can be performed
electronically, which means using computers and mobile devices instead of cash
or credit cards. While most commonly used in the online economy, it is not
restricted to those sectors. In fact, many businesses are already experimenting
with digital payments. Companies such as Apple Pay have been testing this type
of technology since 2014. Since then more and more people have become aware of
cryptocurrency and other forms of digital currency. Even countries like Canada
(and several states) now permit their citizens to use cryptocurrencies as a
medium of exchange for goods and services.[1] The term "digital
currency" has not yet received widespread acceptance among economists,
investors, government agencies or consumers at large.[2] There is currently no
universally accepted definition of what constitutes a digital currency; some
analysts argue that any system capable of performing monetary transactions in
some way should be considered a currency in itself. However, regardless of how
you look at it, there are advantages to the shift from traditional money to
crypto-currency.
The journey of the ICC Under-19 Cricket World Cup: A historical account
Digital currencies are often classified by how they operate
on the blockchain network, where records are stored and verified through
consensus. Some types of Bitcoin operate without proof of work, so miners
compete to validate block headers using computational power. These types of
cryptocurrencies generally are less susceptible to fraud than others. Examples
include Ethereum and Solana. Distributed Ledger Technology Ethereum, also known
as the "thereum network," operates atop an open source code
repository called Go. In short, its purpose is to create decentralized internet
applications known as dapps. All of these apps create new value for users by
building upon previous innovations. This model allows anyone using them (or
another application) to earn rewards. By doing so, everyone benefits from the
combined efforts of all participants. As long as the platform continues to
grow, it will continue to benefit everyone who participates in its ecosystem.
One notable example of decentralization via smart contracts was Web 3.0's DAO
project. Its main feature is the ability to interact between smart contracts on
the blockchain. Any user can submit a request for assistance (for example,
getting paid after completing a transaction).[5] Although smart contract
platforms have existed since the 1990s such as ComputeNorth, the first fully
functional Ethereum implementation was made public in 2017. Ethereum was
officially launched in 2015.
Socially beneficial models can be created from the ground up,
although they may still require proof of concept in order to gain traction.[8]
For example, OpenZeppelin offers social engineering tools and a set of data
sources on its blog. It claims to combine financial markets expertise with
community feedback to improve product development.[9] Other social impact
startups like Dope Labs are actively working on self-sufficient economic
systems that would allow for full adoption and regulation of cryptocurrencies
beyond fiat currency. If done correctly, however, could lead to positive
outcomes such as decreasing poverty, increasing equity, or improving education.
The idea of making a virtual currency from scratch can be
expensive and complicated. With the rise of alternative energy sources and the
growing popularity of sustainable energy solutions, greenbackism may be
replaced by carbon neutral.
HISTORY DIGITAL CURRENCY
The earliest examples of cryptocurrencies date back to 2008
when Satoshi Nakamoto published a paper outlining a peer-to-peer electronic
cash system. Later versions of E-cash were developed over time, including one
proposed for Bitcoin and the original version used for Litecoin. Over time, the
Bitcoin standard became established as the foundation of the entire industry.
Due to technical issues such as slow transmission rates and problems associated
with distributed ledger technologies (DLTs), the need for bitcoin mining has
caused significant growth behind its price.
Ethereum's success was largely due to its unique features,
but the developers are credited with paving the path for other projects. They
implemented an innovative algorithm referred to as Proof–of–Stake (PoS). PoS
was designed around having validators stake out blocks of existing bitcoin
transactions, in order to verify the legitimacy of new ones. To increase this
function, the team added additional layer 1 functionality and the launch of
sharding and scalability which enabled the creation of thousands of smaller
blockchains. Soon subsequent teams came to adopt these mechanisms with similar
techniques. The current state of the Bitcoin network includes 51% of total hash
power being shared by miner pool providers.
It was thought by some critics that bitcoin was too
disruptive and would soon replace the US dollar. This view was contradicted by
the ongoing popularity of ethereum and other projects created under the name
#blockchain in comparison to the existence of bitcoin. More recently, newer
blockchains such as Cardano, Avalanche, Polkadot, Stellar, Tezos and Tumbler
have emerged, offering both a secure alternative to bitcoin but also allowing
holders of other cryptos to buy in. Newer protocols provide for greater speed
and efficiency compared to bitcoin, though the majority of cryptocurrencies are
still based on its protocol. Many factors have contributed to bitcoin's demise,
notably the fall of Mt Gox, the collapse of Coincheck, and concerns with
anonymity, transparency and accountability. Most prominently due to these
events is the lack of trust caused by Russia's invasion of Ukraine.
While there has been little progress in regards to reducing
the risk or costs associated with mining, Bitcoin has proven to be an effective
method to circumvent some regulatory issues in recent years. When viewed as
part of a broader context, Bitcoin can potentially overcome some of the
barriers faced within today's financial system such as central bankers' control
over liquidity and capital markets. Ultimately, due to the uncertainty
surrounding the future of conventional finance and the risks involved within
investment in new ventures, mainstream financial institutions (such as banks)
will likely hold onto their investments in bitcoin and other cryptocurrencies.
KEYS TAKEAWAY DIGITAL CURRENCY
The following table shows the top ten most commonly traded
cryptocurrencies listed in terms of market cap.
Cryptocurrencies list as of April 2020. Ranking by market
capitalisation (as of 30/01/2022), according to CoinMarketCap.
Some experts believe that cryptocurrencies have only just
begun to evolve and will continue advancing and gaining traction for the
foreseeable future. Meanwhile, others predict the eventual elimination of the
world’s largest economy. Regardless, the potential gains in cost savings,
faster processing times, lower fees and more access to more products and
services will keep entrepreneurs moving forward with projects. Despite
criticisms about cryptocurrencies such as poor usability or volatility,[14]
blockchain technology has revolutionized modern commerce, making it possible to
make purchases in seconds without even touching a bank account or computer.
Other cryptocurrencies have also gained traction, though they
are highly dependent on a single aspect of blockchain technology: Bitcoin.
Because of the relatively high initial investment required and overall
volatility, blockchain networks remain popular and lucrative. Though new
entrants will undoubtedly emerge into the field, we can expect more established
players such as Visa and Mastercard accepting Bitcoin as a mode of payment in
the near future.
Although the nature of the network differs from blockchain
technology and tokens to ensure decentralization, the underlying principles of
Bitcoin and similar blockchains remain the same. Users are able to transfer
funds across multiple accounts on different blockchains or across chains using
an open source toolkit. Blockchain technology provides security when it comes
to third party exchanges and storage with a combination of cryptography and
randomness. Blockchain is constantly expanding to meet current needs, such as
creating a global marketplace by hosting games such as Minecraft and Niantic, a
gaming company founded by Bill Gates and Mark Cuban.[15]
In early 2000s, two companies had appeared on the scene; the
very first centralized database management system was IBM's Lotus Notes,
released in 1997. Shortly followed, Oracle announced the release of its first
commercially available business intelligence product, Oracle NetWeaver, in
1998. Both companies focused on providing solutions for organizations managing
databases and other enterprise resources, which included sales data, customer
relations, inventory and accounting systems.[16] Many competitors followed suit
until Microsoft introduced SQL Server and MySQL in 1999, effectively replacing
Lotus Notes and Oracle.[17]
As the number of cryptocurrencies continued to spread
throughout the world, so did the scope of cryptocurrency innovation. Each year,
blockchain startups create new ways to solve various problems, such as adding
security for private key pairs and ensuring accuracy and verifiability within a
blockchain network. Similarly, there is an influx of new entrants into the game
each year, as well as mergers and acquisitions into publicly traded
corporations, resulting in ever-expanding trading volumes and markets.
IMPACTS OF DIGITAL CURRENCY
The history of cryptocurrencies is filled with controversies
and speculation. Whether digital tokens really exist, whether they are actually
a good investment, if governments can regulate them appropriately, or if it
will ultimately succeed as a replacement for the United States dollar are
topics that cannot come to a definitive answer. The truth remains that there
are numerous factors that determine the direction toward which the conversation
regarding cryptocurrencies will take. Nevertheless, if we examine the past 50
years closely, it becomes clear that there are several things to be seen:
First, cryptocurrencies have helped reduce friction and time, as individuals
and businesses could easily move funds across borders and avoid excessive
charges and taxes. Second, crypto is playing a role in removing intermediaries
within the global supply chain by eliminating middlemen which makes
international trade and shipping easier than before. Finally, cryptocurrencies
are changing consumer behavior by enabling consumers to purchase goods and
services without the hassle of dealing directly with merchants. From buying
groceries to paying with physical coins, the possibilities for transformation
of the modern consumer are limitless.
