Bitcoin became the first decentralized digital currency in 2009; numerous cryptocurrencies have been created since then. Unlike traditional currencies, cryptocurrencies do not have a basic underlying value. It is not legal tender, and is not currently backed by any government or legal entity. In addition, its supply is not determined by a central bank and the network is completely decentralized, with all transactions performed by the users of the system. Cryptocurrencies have the potential to allow consumers access to a global payment system—anywhere and anytime. User participation is restricted only by access to technology.
The report talks about the cryptocurrencies penetration, acceptance in the market, market value, key players and latest business & technology trends.
Wide acceptance of cryptocurrencies in financial sector and by top notch banks is based on the bitcoin’s core technology—blockchain. Many companies, banks and industry leaders see the blockchain architecture as the template for a host of other applications.
There are over 200 digital currencies in existence today and some 14.6 million bitcoin units in circulation. Entry into the marketplace is undertaken by so many due to the low cost of entry and opportunity for profit making through the creation of coins. Cryptocurrency market is highly volatile and the regulatory landscape is still uncertain.
The cryptocurrency market is highly concentrated with bitcoin having more than 90% of the total capitalization. Litecoin, Dogecoin, Peercoin, DASH (DarkCoin), NovaCoin and Quark are some of the digital currencies in the market other than bitcoin.
Cryptocurrencies and blockchain technology are creating greater interest in financial institutions and banks as cryptocurrencies makes online transactions simpler and safer. It provides the ease of making online transactions and that too at a low cost. The remittances are charged only at 10% when compared to traditional remittance services. And most of all, there is no risk of inflation when using cryptocurrencies, because the rate at which bitcoins are created is slow, and the total number of coins that can be created is limited.
Cryptocurrency acceptance is growing among merchants as more and more consumers are opting for cryptocurrency-based transaction structures. Considering the wide acceptance of cryptocurrencies, the government is also getting involved in studying and investigating its regulatory framework.
In the near future, cryptocurrencies have the potential to become the dominant way that people spend money. Unlike traditional forms of money, which tend to gradually lose their value over time due to inflation, simply owning digital currency is an investment. If it can overcome the hurdles and stabilize into its full potential, the impact on the world will be incredible.