Skip to main content

The Financial World of Cryptocurrency and Blockchain

Copywriter & Seo blogwriter. I write engaging copies for blog, websites, ecommerce and digital publications in the Finance & Lifestyle niche

the-financial-world-of-cryptocurrency-and-blockchain

Do you know that the price of a bitcoin started at $0.30? If you had put $100 into bitcoin in 2011, when it was still $0.30, you might have gotten 333 bitcoins. Interestingly, bitcoin's price fluctuates, but on November 10, 2021, it hit an all-time high of $68,990.90. After hearing several success stories of people who bought bitcoin early and eventually saw significant returns on their initial investment, I'm sure you'll agree with me that bitcoin is a viable headwind for achieving a remarkable financial gain in a short period.

Didi Taihuttu, a man who sold all he owned for Bitcoin before the 2017 bull market was one of the earliest bitcoin investors

the-financial-world-of-cryptocurrency-and-blockchain

Didi was enthralled by bitcoin and its potential to disrupt the world of traditional finance. He put his money into bitcoin mining and went about his business. Didi sold his house, cars, furniture, and nearly all of their other belongings to amass as much BTC as possible.

Bitcoin is a new digital money that was invented in 2009 by a mysterious figure known only as Satoshi Nakamoto. Transactions are made without the use of a middleman, i.e., no banks!

In 2008, Nakamoto wrote a paper that sparked the crypto currency's growth. The term "peer-to-peer electronic currency system" was coined to indicate the usage of a peer-to-peer network that solves the problem of double-spending. Because bitcoin does not exist in physical space, unlike real money which can only exist in one place at a time, the problem of double-spending might have been a severe issue.

A decentralized Market was introduced by Nakamoto. Rather than functioning from within a centralized exchange, this technology allows investors to deal directly with one another. To transact securities, buyers and sellers do not need to be in the same location. The decentralized market shows real-time bid/ask pricing.

Who Were the Early Users of Bitcoin

Hal Finney, Peter Saddington, Dave Carlson, and Laszlo Hanyecz were among the first bitcoin users.

Satoshi Nakamoto and Hal Finney, a member of the Cypherpunks, made the first transaction on the blockchain network, and Finney received 50 BTC from Satoshi Nakamoto in exchange for his support. Hal is famous for being the first person to receive Bitcoin. Peter Saddington is a businessman who bought bitcoins when they were worth $2.52 in 2011. He had roughly 45 bitcoins. From his investment, he made almost $750,000 in 2017. Dave Carlson and Laszlo Hanyecz we're both early miners of bitcoins.

It is undeniable that early investors and adopters have become millions and billionaires as a result of acquiring BTC. Bitcoin can be used to make anonymous purchases. Furthermore, because bitcoins are not tied to any government or regulated, international payments are simple and inexpensive.

Some people buy bitcoins purely as an investment, expecting that their value would rise. It should however be noted that Cryptocurrencies are extremely volatile, prone to market crashes and bullrushes. To maximize your chances of profit, regard cryptocurrencies as a long-term investment, similar to traditional assets. Bitcoins are kept in a digital wallet, which can be found on the cloud or the computer of the user. The wallet is a type of virtual bank account that allows users to send and receive bitcoins, make purchases, and store money.

Early Forms of Money

Allow me to transport you back in time to a time before money when people obtained and exchanged items by bartering. Without the use of money or a monetary medium, goods are exchanged between two or more parties. Because there was no true concentration of power and no over exploitation of natural resources back then, trade by better was incredible, but it was difficult to measure value and lack of unity

the-financial-world-of-cryptocurrency-and-blockchain

Because of an issue with batter using trade, the transition to currency was made.

People traded value for value throughout the bartering age. So, how did it become possible to trade a worthless piece of paper for something useful?

Then people realized that currency must first establish a critical level of trustworthiness.

People began to use money in the shape of shells, barely, feathers, and whale teeth to encourage commerce.

The properties of these early forms of money, however, presented some difficulties. Some features of these forms of Money became apparent.

Scroll to Continue

Barley was not only difficult to transport, but it was also not portable or long-lasting. Whale teeth are difficult to separate into two, making them difficult to divide. Shells can be found on any beach, therefore they're not exactly rare.

Because possessing a lot of money can make an individual strong, and power could get such a person a lot of it, kings came up with the notion of minting coins out of precious metals and stamping them with an insignia that ensured their weight and value. Metal money was also established since it had inherent worth and could be exchanged with other communities.

The popularity of Metal money, however, led to the temptation that sovereigns could gain money by circulating debased currency worth less than face value by slimming down the coins or sneaking cheaper base metals into the mix.

PAPER MONEY

People trusted the paper because it said it was worth what it said it was worth, and they could always swap it for gold, silver, or the coins it represented.

The only thing that sets a bank note apart from any other piece of paper is confidence.

MONEY AND BANKS

Banking had become a highly reputable profession by the nineteenth century. To make money through basic money lending, banks charged a lower rate of interest on the money they took in than on the money they loaned out. However, banks quickly recognized that as long as depositors didn't all call for their money at the same time, they could lend out far more money than they had on deposit. Fractional reserve banking is the term for this.

THE BLOCKCHAIN TECHNOLOGY

the-financial-world-of-cryptocurrency-and-blockchain

The blockchain, which is used by bitcoin and other cryptocurrencies to generate trust, is a network-based ledger. Blockchains, like traditional ledgers used by institutions around the world, hold records of every bitcoin transactions ever made.

Because the contents in any one block cannot be changed retrospectively without affecting all following blocks, blockchains are resistant to data tampering.

Based on work by Stuart Haber, W. Scott Stornetta, and Dave Bayer, the blockchain was popularized by a person (or group of persons) using the name Satoshi Nakamoto in 2008 to serve as the public transaction log of the cryptocurrency bitcoin.

Blockchain is a method of storing data in such a way that it is difficult or impossible to alter, hack, or cheat it. A blockchain is a digital log of transactions that is duplicated and distributed across the blockchain's complete network of computer systems.

SOME INTERESTING FACTS ABOUT BITCOIN AND BLOCKCHAIN


1. Block chain is being invested in by 90% of North American and European banks.

2. It is impossible to prohibit the use of Bitcoin. Banks and governments may impose restrictions, but anyone with internet connection can use Bitcoin.

3. Block chain is so versatile that it can be used for storing medical records, concluding binding agreements, tracking the flow of goods, storing personal credit records, verifying payments, and much more, in addition to recording financial transactions.

4. Cryptocurrency is controlled by a set of digital keys and addresses that represent virtual token ownership and control. Any public address can be used to deposit bitcoin or other tokens. However, even if tokens are deposited into a user's address, they cannot be withdrawn without the unique private key.

In 2013, James Howells threw out a hard disk containing his digital wallet, which cost him a lot of money. There were 7,500 Bitcoins in the wallet. Howells, who resides in Wales, is attempting to persuade the local city council to allow him to excavate the dump in a desperate attempt to locate the Bitcoin-containing hard drive.

Howells has given the city a part of the proceeds in exchange for the opportunity to search. At the time of writing, the Bitcoins lost were worth nearly $350 million.

Block chain technology is uncontroversial and has proven to be reliable over time. It has been successfully implemented in both the financial and none financial worlds

There is no such thing as a perfect or faultless technology, and Blockchain technology is one of them. Let's take a look at some of the blockchain technology's benefits and drawbacks.

ADVANTAGES

i Transactions using blockchain technology are executed in a matter of minutes. Consider a bank transaction to a person who has a different bank account. The transactions take at least two days to complete. At this point, a person using crypto to conduct virtual transactions can complete a series of transactions.

ii Every transaction is made public because it is an open source ledger. This eliminates the possibility of deception. The block chain's integrity is supervised by kids who keep a watch on all transactions.

iii Transactions using blockchain technology are executed in a matter of minutes. Consider a bank transaction to a person who has a different bank account. The transactions take at least two days to complete. At this point, a person using crypto to conduct virtual transactions can complete a series of transactions.

DISADVANTAGES

i Some applications require the user's identification to be verified, and because there is no central authority to ensure the user's identity, the creation of certain decentralized apps becomes a severe difficulty.

Anonymity or the lack of user identity is a significant impediment that criminals exploit to conduct unlawful transactions.

ii To offer consumers ownership over their cryptocurrency units, blockchain employs public-key (or asymmetric) cryptography (or any other blockchain data). A private key is associated with each blockchain address. The private key, while the address can be shared, should be kept private. Users must use their private key to access their funds, thereby making them their own bank. If a user loses their private key, their money is basically lost, and they have no recourse.

THE FOLLOWING ARE SOME REASONS WHY BLOCKCHAIN IS WORTH GETTING EXCITED ABOUT

1. Increases security and storage.

Cloud storage is a fantastic advancement. You, on the other hand, have no influence over the storage infrastructure. It's in Google's, Dropbox's, Facebook's, or Apple's hands. And if you value your privacy, this could be a problem. Because you'll require an encryption key to access your data, you can be confident that only you will have access to it.

2. Huge Demand

Because Blockchain technology is a rapidly growing industry, there are numerous chances available to you. Cryptocurrency is an example of a Blockchain-based application.

It is primarily used by startups and few well-known financial institutions.

If you believe you have the necessary talents to work in Blockchain and quickly adapt to the current wave, look no further and brush up on your skills to take advantage of this incredible platform.

3. Being knowledgeable about blockchain puts you on the cutting edge of innovation.

You'll be able to operate blockchain technology, alter stagnant sectors, and develop enhanced business models if you have capabilities in blockchain enabled business.

This skill set will not only help you grow into senior positions, but it will also put you at the forefront of change. You might be the one to make decisions about company collaboration, technological implementation, and supply chain reconfiguration using blockchain. You might also help your company transition to a new era of cybersecurity, governance, and sustainability.

DISCUSSIONS AND CRITICS ABOUT BITCOIN AND BLOCKCHAIN TECHNOLOGY

1. Issues with Scalability

It deflates those who believe Bitcoin is a useful currency when the network can barely handle 7 transactions per second. Hyperledger can manage 10,000 transactions per second, while Visa can handle 24,000 transactions per second.

These scaling difficulties cast doubt on blockchain's practical application. The overall number of transactions per second is limited because each participating node must validate each transaction in the network. A bitcoin transaction can take up to several hours to commit.

2. Costs of transactions and network speed

After being marketed as "virtually free" for the first several years of its existence, Bitcoin now has significant transaction expenses.

It can only execute roughly seven transactions per second as of late 2016, and each transaction costs about $0.20 and stores only 80 bytes of data. The majority of this expense is covered by energy usage. There are relatively little odds that technological advancements would be able to fix this problem. The storage problem, on the other hand, may be encompassed by the energy difficulties, which cannot be remedied.

There's also the politically contentious topic of using the bitcoin block chain as a data storage system rather than a transaction system.

Allow me to transport you back in time to a time before money when people obtained and exchanged items by bartering. Without the use of money or a monetary medium, goods are exchanged between two or more parties. Because there was no true concentration of power and no over exploitation of natural resources back then, trade by better was incredible, but it was difficult to measure value and lack of unity.

© 2022 Boluwatife Adeyeye

Related Articles