The term “cryptocurrency” refers to a payment type used online to purchase products or services. Numerous businesses have created their currencies, often referred to as tokens, and can be traded specifically for the product or service the company offers. Imagine them as the arcade tokens you’d use or chips for casinos. It is necessary to exchange the real currency for access to the great or service.
They work with a technology known as the blockchain. Blockchain is a decentralized system that is spread across several computers and tracks transactions and manages them. The main reason people are attracted to technology is its security.
15,000 unique Cryptocurrencies are traded publically. They continue to expand. The total value for all cryptocurrencies in November 29, in 2021 was greater than $2.5 trillion. It had fallen from an all-time high of $2.9 trillion just a few weeks before. The total value for bitcoins, the most awaited electronic currency, was estimated at approximately $1.1 trillion.
What is the reason why the market for Crypto is falling?
China’s clampdown on Crypto comes just days after Musk’s shocking announcement. Musk’s announcement marks a dramatic turn for Tesla which only began accepting Bitcoin as a payment method in January 2021.
The move came about after the electric car maker acquired $1.5b (PS1.06b) in Bitcoin shares. This caused the Value of Cryptocurrency and Tesla to rise. However, the effect on the environment caused by Bitcoin mining – a complex process of creating new digital tokens- has resulted in Tesla removing this option from its customers.
Musk has reaffirmed his belief that Cryptocurrency is the potential for a “promising future” but that it “cannot come at great cost to the environment” in a tweet. Musk was a consistent advocate for Cryptocurrency, as well. Tesla’s announcement was appreciated all over all markets, with many other digital tokens dipping in value.
It wasn’t the only Cryptocurrency that felt the first effects, as the top 10 had a dip in value.
Dogecoin was made up as an experiment in 2012, before seeing its shares rise and has since dropped, while Solana has witnessed its price increase by more than eight percent.
Musk’s impact cannot be overstated because, even though companies like PayPal, Mastercard, and Facebook have all backed crypto, his Tesla announcement still shook the market.
What’s happening to bitcoin?
Bitcoin and the people who invest in it have experienced a wild lately, with prices fluctuating between sharp and rapid declines in the wake of numerous news reports.
To summarize the massive ups and downs of the last couple of months:
- 16.12.2020: The price reaches $20k per piece for the very first time.
- April 13, 2021: The Value hit a record high of $63,375
- June 23, 2021 Fall to below $35,000 for the very first time within five months
- August 2, 2021 Bitcoin increases to its highest since May, averaging $40,000
- August 23, 2021: The price rises to increase to over $50,000
- October 20, 2021: Cost increases to $67,000
- On October 27 of 2021, Bitcoin plunges to $588,000
- 10-November-2021 $68,000 to $68,000.
- November 19, 2021, Lower to $59,000
Then why is Bitcoin so volatile?
Numerous negative news reports and threats of more regulation have driven prices of Bitcoin lower:
- Then, in May, Elon Musk said that Tesla would not be accepting cryptocurrency-based payments due to concerns over the environment.
- Sanctions by China’s Chinese Government in June on mining and trading bitcoin
- UK banks stop payments to cryptocurrency exchanges
- Donald Trump described bitcoin as an untruth that was competing with the dollar as “the currency of the world” in June
- FBI agents have seized millions of dollars’ worth of bitcoins from criminals
- UK’s financial watchdog lists Binance as one of the biggest crypto exchanges. Large banks like HSBC and Santander are following suit.
- IMF warns – in August, on countries that are using Cryptocurrency as legal tender, declaring that widespread use of cryptocurrencies could be a threat to “macroeconomic stability” and could compromise the integrity of financial transactions.
- Crypto theft Crypto hackers, Poly Network, stole $600 million in August, only to return nearly one-third of it just four days later and say that they took it “for fun” and to “expose the vulnerability” in the system before anyone else did
However, there have been some positive news stories that have pushed the price up in 2021:
- Morgan Stanley became the first major US bank to provide wealthy customers access to bitcoin-based funds, but with a limit of less than 2.5 percent of the total net worth as of March.
- Elon Musk says that Tesla will likely accept bitcoin payments again if more than 50 percent of their power use comes from renewable sources.
- Amazon publishes a job advertisement for a “Digital Currency and Blockchain Product Lead,” leading to speculation that it may soon accept bitcoin payments.
- El Salvador is making bitcoin legal tender starting on September 7
Why you should be concerned about Cryptocurrency
It is a form of currency that can be more secure as an instrument for exchange.
The idea behind this is that since transactions are publicly accessible, irreversible, and generally inaccessible and controlled by individuals, the users and their financial transactions are secure.
Of course, numerous benefits are associated with Cryptocurrency. Here are four reasons that people have started to pay attention to Cryptocurrency.
1. Cryptocurrency Is owned by Everyone
Cryptocurrency works similarly to a traditional, national currency, with certain important variations.
Present “fiat currency” is created and controlled by a government institution, and all of them are now considered debt. Any person who has a stake in a country’s currency has the “IOU” issued by that specific country.
Cryptocurrency doesn’t stand for debt. It only represents itself, and its worth is determined by what a person will be willing to pay to acquire it.
2. It’s almost impossible to Create
Cryptocurrency operates on a blockchain. This can be described as the ledger distributed. Understanding blockchain technology will help you understand why it is crucial to the strength of a digital currency.
“Block ” is composed of chunks of encrypted data. “The “chain” is the public database where the blocks are kept and linked to each other.
Every block on the blockchain is identified by a unique code that makes it stand out from other blocks available. This code is known as a hash. Blocks of data that are added to blockchains are added in chronological order. The new block is created immediately after the block created before and comes with its hash.
3. Cryptocurrency Transactions are (Mostly) Private
Traditional currencies issued by government agencies you can transact on your own or purchase something in person using cash.
4. The security of cryptocurrency increases with time and value
You’ve previously discussed how a manipulation or hack will require a significant amount of money and power until it would be a fruitless endeavor.
The consensus network comprises all computers that are receiving replicas of blockchain or distributed ledger. For more well-known cryptos such as Bitcoin or Ethereum, the cryptocurrency networks are so vast that hacking attempts are almost impossible.