With Bitcoin prices touching $50,000 earlier this year, speculations are rife that this may be similar to the dotcom craze in 2000 that finally led to the dotcom bubble bursting. When that dotcom mania had gone down, it took down with it hundreds of companies. The situation appears to be somewhat similar here but the reasons for cryptos to survive are stronger than you imagined.
Cryptocurrencies were introduced as decentralized digital currencies designed to facilitate quick money transfers without need for intermediaries or middlemen. These were founded on the groundbreaking blockchain technology that frees them from control by any centralized bank or government. Instead, it is maintained through a network of computers or nodes spread across the globe which is responsible for verifying the transactions
Is the cryptocurrency here to stay?
- Crypto market may be far more volatile compared to the stock market but cryptos are here to stay. They were created to make transactions faster and safer. This has been successfully achieved with the Bitcoins and other cryptos following it. Records can now be maintained without risks of data getting hacked or pirated and frauds can be successfully eliminated.
- Another reason why cryptocurrencies will continue to exist is because they will never trigger inflation, unlike other fiat currencies controlled by governments and banks. Bitcoin, for instance, has a limited supply; there can only be 21 million Bitcoins and this scarcity heightens its demand.
- Reputed banks are now collaborating with cryptos to start their own digital currencies; for example, Zcash is collaborating with JP Morgan. Besides the already-established coins like Ethereum and Bitcoin, there are hundreds of other digital coins and tokens that have excellent backers, robust business models, and effective AML procedures. However, you must research well before you buy these.
- Besides popularity of cryptos, it is really the technology on which they have been founded that has permeated almost every industry one can think of. The blockchain is the real masterpiece that is now finding relevance, in the healthcare world, music industry, supply chain industry, etc. Any transaction that can be recorded is now seeking the blockchain, regardless of whether it is birth certificates, medical records, insurance policies, etc. Similarly, the use of smart contracts which is based on Ethereum’s blockchain is finding use in execution of agreements amongst enterprises.
- The existing drawbacks that cryptos face like the threat of hacks or thefts can be overcome with more and more technological advancements. As they grow more and more popular, they will start attracting the attention of governments and financial institutions that will then try to regulate them. Even though mainstream adoption is yet to happen, big companies like PayPal and Tesla have been showing their support for cryptos.
- Cryptos will continue to attract individual investors keen to have a diversified portfolio. As long as you have an appetite for risk and choose an effective trading strategy, it is possible to make profits through crypto trades. The market is volatile; so, your chances of winning or losing big are equally strong. But for someone who can stomach this volatility, crypto will continue to be a preferred form of investment.
- Paying employees is far more convenient with cryptos, especially when your workforce is spread across the globe. Cryptos facilitate cross-border transfers and instant transactions, involving very nominal charges. Earlier, people would turn to online platforms to raise funds; with cryptos, crowdfunding has become simpler. With the blockchain in place, the donations can now be viewed by everyone.