Future Money: Cryptocurrency

Cryptocurrency is becoming very popular and is a global phenomenon of doing transactions these days. Many people and institutions are still developing their understanding of it, some are skeptical about it and yet many are evaluating the importance of cryptocurrency. But one thing is sure that it has taken both technology world and financial world by storm. Satoshi Nakamoto the creator of cryptocurrency actually aimed at building a decentralized peer-to-peer electronic cash system without any server or central authority. Cryptocurrency was basically an outcome of this invention by Satoshi Nakamoto which he named as Bitcoin.

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Actually in the centralized payment system, there is a server that keeps the record of balances & transactions so as to ensure that no single entity spend same amount twice. In the absence of centralized server every single entity in the network has to have a record of all transactions to keep a check on double spending. There is a requirement of total consensus among the peers/entities in the network about the records or transactions. If one peer disagree about even a single minor balance then the whole network will go for a toss. Building a consensus in a decentralized system is the single most important element that needs to be addressed in order for such a system to work. There were many failed attempts to build digital cash system in the past but it was in 2008 that Satoshi made this decentralized network to work similar to that of a peer-to-peer network of file transfer and gave birth to Bitcoin - first and foremost cryptocurrency. It was then followed by Ethereum, Ripple and more than 1500 other cryptocurrencies, most of them witnessing significant growth in transactions every month.

Crypto currency has somewhat similar dynamics to Equity and has been turning heads in the financial services as in the recent past mind blowing investment returns have observed. In the year 2017 Bitcoin had 1500% increase, Ethereum had over 10,000% surge and similar such growths were observed in many different cryptocurrencies. Just like equity their tokens are set by demand, supply and trade across numerous exchanges and involve more risky crypto tokens with higher potential returns. Giants like Visa, Citi and Nasdaq are aware of distributed ledger capabilities of cryptocurrencies for several years now and they have invested more than $30 million dollars in blockchain. Gradually cryptocurrency is obtaining strong footing in account data reconciliation, forex transaction settlements, in grabbing revenues, startup funding etc. Cryptocurrency has proved to be a major breakthrough of recent times in the technology world. As we now know that blockchain technology is fundamental to cryptocurrency and today blockchain is being explored for a variety of applications. Based on peer to peer networking techniques distributed ledger technology is becoming more trustworthy way for storing decentralized information of investors and companies. Options are now open for developers to develop some decentralized applications above existing decentralized solutions rather than on centralized servers. Other interesting part is open source nature of blockchain based models where users actually don't need to sign up as they already have some accounts and their public and private keys are associated with their sessions.

Cyrtocurrency and blockchain being the hottest topic in both technology and financial world, has gained huge traction and this is evident from the facts that by the end of 2017 the size of cryptocurrency market was around $600 Billion, there has been threefold increase in blockchain related jobs on LinkedIn since 2017 and there has been a global expenditure of over $2 Billion in 2018 on blockchain solutions.

By: Mr. Manik Gupta, Assistant Professor (CSE), Chitkara University, H.P.

References

1. https://blockgeeks.com/guides/what-is-cryptocurrency/
2. https://www.icoalert.com
3. https://www.healthureum.io/genesis-of-digital-economy.php
4. https://medium.com/road-to-crypto-world/what-is-cryptocurrency-21st-century-unicorn-or-the-money-of-the-future-675f7b96861
5. https://www.express.co.uk/finance/city/914087/cryptocurrency-predictions-2018-bitcoin-news-blockchain-ethereum-ripple
6. https://www.newgenapps.com/blog/future-of-blockchain-technology-applications