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Are we ready to embrace Cryptocurrencies? 18 March, 2021   

A cryptocurrency is a form of digital currency that uses blockchain technology, an online ledger controlled by disparate nexus of computers for keeping records of transactions made between two parties.


The American cryptographer David Chaum was the first person who devised the idea of cryptographic electronic money named Ecash in 1983. Afterward, In the year of 1995, David executed his idea via Digicash. It was a type of electronic payment that allowed user-friendly software to withdraw cash from a bank so that it is sent to the beneficiary.


The National Security Agency published an article about cryptocurrency framework entitled, How to Make a Mint: The Cryptography of Anonymous Electronic Cash. The research paper was published in MIT mailing list in 1996 and then in the American Law Review in 1997.


Types of Cryptocurrencies


According to CoinMarketCap.com, there are about 6,700 cryptocurrencies available in the market with distinct functions and requirements. As per a report on the finance.yahoo.com website, the top five cryptocurrencies by market capitalization are listed below with their worth.


I. Bitcoin (BTC) $128bn


II. Ethereum (ETH) $19.4bn


III. XRP (XRP) $8.22bn


IV. Tether (USDT) $6.4bn


V. Bitcoin Cash (BCH) $4.1bn


Milestones Achieved by Cryptocurrencies


TradingView website states that, in late 2017, the market`s capitalization was only around $760 billion. However, CoinGecko`s Index of 6,124 assets reports, it is the first time that cryptocurrency has hit the $1 trillion marks on 6th January 2021.


Jack Purdy, a decentralized finance analyst at Messari said, “The $1 trillion mark cements cryptocurrency as an investable asset class that no longer sits on the fringes of Traditional Finance as a toy for retail investors.”


Qiao Wang, the co-founder of decentralized finance (DeFi) and former quantitative trader at Tower Research, told CoinDesk that cryptocurrencies are an institutional-grade gamble. According to Wang, the market is fluid enough to send enormous amounts of finance, yet simultaneously premature enough for a 10x return.


Bitcoin worth


In 2009, Satoshi Nakamoto found Bitcoin. He conceived the first blockchain database and solved the double-spending problem for digital currency using a peer-to-peer network.


Countless established companies are investing in bitcoin.


Recently, on 8th January 2021, CEO Elon Musk announced that he invested $1.5 billion in bitcoin, this is one of the huge investments made by any mainstream corporation into cryptocurrency.


Furthermore, in a document with the US Securities and Exchange Commission (SEC), Tesla also showed intend to accept digital currency as a payment option for their future products. Not long after Tesla’s declaration, the pace of bitcoin soars to an unequaled high, penetrating the $44,000-mark unexpectedly. 


However, Tesla might hold the largest investment in bitcoin by a customer-facing company, it is essential to know that Tesla does not own the greatest sum of bitcoin for a solitary entity`s corporate treasury.


The Indian CEO of crypto-exchange ZebPay, Rahul Pagidipati says that it`s a signal to other organizations that bitcoin is becoming a strong reserve asset for any accounting sheet.


Leading Companies and Their Investments


1. MicroStrategy


MicroStrategy, a prominent mobile software and business intelligence firm holds 71,079 BTC in reserve. In February 2021, the firm proceeded with its Bitcoin purchasing binge with the acquisition of 295 BTC. On 28th October 2020, MicroStrategy chief Michael Slayer tweeted that on average he used to buy $9,882 in Bitcoin.


Morgan Stanley disclosed on New Year`s Eve that he has bought 10.9% of MicroStrategy and hoping for other organizations to put resources into Bitcoin.


Slayer, while talking at Binance Blockchain week, clarified for what reason he had decided to choose Bitcoin over gold as a reserve source. As per Slayer, the profits on gold are not as convincing as Bitcoin.


2. Galaxy Digital Holdings


Bitcointreasuries.org website indicates that Galaxy Digital Holdings holds 16,402 BTC- worth simply more than $770 million.


Founder of capital market company Galaxy Digital, Michael Novogratz, sees Bitcoin dramatically increasing to $100,000 before 2021 is over. Novogratz in a Bloomberg Television interview said, “You’re going to see every company in America do the same thing.” This Interview telecasted at the time when Tesla owner announced its investment of $1.5 billion in Bitcoin.


As stated by Michael Novogratz, Bitcoin has acclaimed instability over a time— it jabbed 25% in a couple of days — has made it hard for risk-averse CFOs to make it a standard piece of corporate depositories. Michael applauded Tesla CEO Elon Musk for investing $1.5 billion in Bitcoin and said, “Now you got the biggest, the wealthiest man in the world and one of the biggest stories doing it.” Novogratz commented, “You’ve got to think other CFOs and CEOs are saying, what should we be doing?”


3. Ruffer Investment Company


In November 2020, a London-based Ruffer investment company allocated 2.5% of its Multi-Strategies funds to Bitcoin. According to Ruffer, Cryptocurrency provides little but a strong insurance strategy against the devaluation of world`s significant monetary forms.


The company quickly turned its Bitcoin investment into $750 million profit when the value of cryptocurrency dramatically doubled to $40,000 — as indicated by the Telegraph Monetary report.


“We’ve been surprised by how well it has done and how quickly. We did not expect immediate fireworks,” Duncan MacInnes, co-manager of Ruffer Investment told the newspaper.


The company picked to pull out the unique venture after making a $650 million benefit. As per MacInnes, they have $750 million in general.


Benefits of cryptocurrency


I. User Privacy


Many users believe that cryptocurrency platforms provide privacy to them. All data about the transference of coins is shared (how and when) but there is no information about the beneficiary and sender of the coins.


II. Limitless transactions


Any human can send an unlimited amount of coins to anyone at anyplace — he just needs a digital wallet with a working internet connection. As transactions are not controlled so you can make transfers anyplace on this planet.


III. No Inflation


There is no space for inflation as there is neither political power nor any organization involved in the framework.


IV. Easy Use


In various countries such as Ukraine opening an account in the bank is a huge task to complete because of overcomplicated systems; while, considering such type of problems using cryptocurrencies can be convenient for respective organizations.


V. Scammers Free System


At present, people are required to provide details about their address, card number, expiration, and so on. It has been difficult to think of a less secure approach as all the purchasing is carried through filling forms on respective websites. This ongoing system provides a chance for scammers to steal data and make illegal transactions. Above all, customers have to pay a small number of fees to keep their bank cards. In cryptocurrencies there is no such mechanism involved; you get two keys: public and private. The public key is available to everyone but the private key is provided distinctly to the owner. Same is the case with the token amount, you are free to use your digital wallet.


Downside of cryptocurrency


I. Lack of stability


Many investors believe that cryptocurrency is extremely volatile and it is “the greater fool” theory because no cash flow is involved.


II. Large risks of investing in cryptocurrency.


According to a few people, the mysterious nature of digital currency exchanges makes them fit for criminal operations such as terrorism and money laundering. These drawbacks create large risks of investing in cryptocurrency.


However, in spite of some disadvantages of cryptocurrencies, many professionals predict their bright future since it provides a chance of saving incentive against inflation; while, eliminating transaction and trade hindrances.


#Bitcoin #Cryptocurrency #Awais_Ali_Shah #facebook.com/IamAwaisAliShah #Airtract #Blogpost #Freelancing #Are_we_ready_to_embrace_Cryptocurrencies? #Technology

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Date:23-11-2021

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