Cryptocurrencies and Their Future

Cryptocurrencies are nothing but digital currencies. They are created with advanced encryption techniques or cryptography. The Bitcoin is the earliest known cryptocurrency that made its first appearance in 2009. This had been launched by Satoshi Nakamoto whose identity remains unknown till date.

As far as the Bitcoin goes, it is going to go through what is known in cryptocurrency lingo as “halving”. This will effectively reduce the existing number of Bitcoins from 12.5 BTC to 6.25 BTC. This event is likely to herald a huge change in the market when it takes place in May, 2020. Most Bitcoin investors are expecting there will be a sharp spike in prices. This had been noticeable in the previous two instances of halving in 2012 and 2016 respectively. The main idea behind halving is to reduce the numbers of Bitcoins and to control inflation.

The volatility associated with Bitcoin value is one of the prime reasons why financial organizations and governments are yet to accept the cryptocurrency. Values of cryptocurrencies are decided by technologies according to critics, and not by rules of economics. Bitcoin miners make use of specialized high-end computers to “mine” the Bitcoin and other cryptocurrencies. By doing so, they can add new blocks to an existing blockchain. The halving of Bitcoins has previously resulted in increase in prices, although one cannot be sure whether there were other influences too.

The volatility in prices of cryptocurrencies is beneficial for traders, but not so much for miners. Traders can buy Bitcoins when prices dip and then sell these when prices rise, thus profiting from small price fluctuations. But for miners who hold many Bitcoins, volatility can be detrimental as this will make mining more difficult. Instead, they want prices to be level so that they can buy newer technologies to earn more coins.

Experts today feel that the cryptocurrency world will witness a big change with institutional money entering the market. The crypto may also be on the NASDAQ and this will help to make the blockchain technology more credible. Cryptocurrency is slated to change the banking industry, according to Tim Draper. Bitcoin indicates frictionless transactions unlike banking transactions that involve more time and money. With the BTC, ETH etc becoming more and more popular, their values will also increase. According to Judd Rosenblatt, cryptocurrencies are excellent in long-term value. The blockchain technology has been a disruptive technology; so, it may not have lived up to popular expectations right away; but things can change over time as has happened with other disruptive technologies. The blockchain technology is growing fast and becoming more and more significant, making crypto a great long-term investment, albeit risky. To Lorenzo Pellegrino, CEO of Skrill, growth of cryptocurrency infrastructure has never slowed down because of market crashes. Investing in a dynamic space implies bigger stakes; so one must do proper risk management and research before taking a plunge. Finally, Alex Althausen of Storm Gain feels that Bitcoin halving scheduled for 2020 will drastically change the demand and supply equation; this event will be a historical milestone and could be the game-changer for the Bitcoin. It might transform it from an unstable asset into a mainstream payment method.

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