Current Digital Currencies: Leading Cryptocurrencies Quoted on August 12
Cryptocurrencies, a revolutionary form of digital or virtual money, have been making waves in the financial world since their inception. These digital assets, which operate on decentralized networks and use cryptography for security, are rapidly transforming the way we perceive and transact money[1][3][4].
At their core, cryptocurrencies lack a physical form, existing only electronically[1][4]. Their security is ensured by cryptography, a technology that prevents counterfeiting and fraud, securing transactions[1][5]. They run on decentralized networks, such as blockchains, and employ consensus mechanisms like proof of work or proof of stake to validate transactions and control new coin creation[3].
Unlike traditional currencies controlled by governments or central banks, cryptocurrencies give users direct control over their assets without the need for intermediary institutions[2][3]. This decentralized nature provides a level of financial independence, offering an attractive alternative to traditional financial systems.
The first and most well-known cryptocurrency is Bitcoin, which was introduced in 2009[3][5]. Bitcoin has a finite emission of 21 million units, and the emission is halved every four years[6]. The total supply, coupled with its finite emission, gives Bitcoin a scarcity value, much like gold.
While cryptocurrencies, including Bitcoin, have shown great promise, they are also subject to market fluctuations due to supply and demand, with no central authority to control their movement[7]. This volatility has been evident in recent times, with cryptocurrencies experiencing one of their worst moments due to a global economic crisis, inflation, and the war between Russia and Ukraine[2].
The term "crypto winter" or "crypto crash" was coined during the first major cryptocurrency crash before the last boom, in which Bitcoin approached US$69,000 in November 2021[8]. The current market downturn has led to the emergence of various altcoins, which are different cryptocurrencies from Bitcoin and stablecoins, which seek to be equivalent to another asset[9].
Stablecoins, such as USDT and USDC, are a type of cryptocurrency that maintains a "peg" with the dollar, providing a level of stability in the otherwise volatile cryptocurrency market[10]. These stablecoins can be bought and sold on specialized platforms, with Binance being the most popular[9].
In conclusion, cryptocurrencies represent a significant shift in the financial landscape, offering a decentralized, secure, and independent means of transacting money. Despite their volatility, they continue to attract interest and investment, promising a future where financial transactions may be faster, cheaper, and more secure.
[1] Investopedia. (2022). What is Cryptocurrency? [online] Available at: https://www.investopedia.com/terms/c/cryptocurrency.asp
[2] BBC News. (2022). Cryptocurrency market crash: What is happening and why? [online] Available at: https://www.bbc.co.uk/news/business-61086685
[3] Coindesk. (2021). What is Bitcoin? [online] Available at: https://www.coindesk.com/learn/what-is-bitcoin/
[4] Invesp. (2022). What is Cryptocurrency? [online] Available at: https://www.invespcro.com/blog/what-is-cryptocurrency/
[5] Coinbase. (2022). What is Bitcoin? [online] Available at: https://www.coinbase.com/learn/crypto/what-is-bitcoin
[6] Coin Metrics. (2022). Bitcoin Halving Explained. [online] Available at: https://coinmetrics.io/bitcoin-halving-explained/
[7] Investopedia. (2022). Cryptocurrency Price Volatility. [online] Available at: https://www.investopedia.com/terms/c/cryptocurrency-price-volatility.asp
[8] Cointelegraph. (2022). Crypto Winter: What is it and how long will it last? [online] Available at: https://cointelegraph.com/news/crypto-winter-what-is-it-and-how-long-will-it-last
[9] CoinMarketCap. (2022). Altcoins. [online] Available at: https://coinmarketcap.com/alts/
[10] Coindesk. (2022). What are Stablecoins? [online] Available at: https://www.coindesk.com/learn/what-is-a-stablecoin/
News about the finance and investing sector often includes updates on cryptocurrencies, such as Bitcoin, which have been transforming the financial world. Despite their volatility, these digital assets, like stablecoins, continue to attract interest and investment, offering a secure and independent means of transacting money.
