In the modern era, cryptocurrency has become an indispensable segment of finance. For example, in 2009, the first cryptocurrency, Bitcoin, was created by a pseudonymous developer Nakamoto Satoshi. No one in the world had a clue that this experiment of Satoshi would grow at such a drastic scale, eventually turning into the most valuable currency of the world. But before we begin to analyze the tactical reasons behind the rise of cryptocurrency, we need to understand the fundamental definition of these virtual coins.
Cryptocurrency is data in binary codes used to exchange data or currency. It is a decentralized unit and works on blockchain technology.
Since cryptocurrency is new in the market and we got acquainted with it recently, it puts many people in a state of dilemma and confusion about whether a virtual coin is the next big thing or will fall drastically, just like most new and undeveloped technologies do??
Many people, including numerous financial gurus, have a strong notion that due to the fact, cryptocurrency does not have any fundamental foundation or base. Although an individual can analyze and predict the future trends of any cryptocurrency, investments in virtual coins are nothing less than a gamble in the casino of Vegas. To know more about cryptocurrency trading, check more about bitcoin. On the other hand, the volume of cryptocurrencies such as ether, bitcoin, dogecoin, Polkadot, xrp, and USD coins increases significantly.
Initially, the primary reason behind the rise of cryptocurrency is that it is a decentralized currency that runs on blockchain technology. In the traditional methods of currency exchange and financial tools, all the transactions and money-related issues are controlled and regulated by the country’s government in collaboration with a bank. Therefore, it creates a lot of compliance and paperwork for the people, and they have to go through very long procedures to do a simple transaction.
Whereas when it comes to money transactions and transfer from one account to the other. Cryptocurrency is one of the most accessible transfer mediums because it is not regulated by any third party and is decentralized. This decentralization of cryptocurrency makes it an ideal option for people. They don’t have to go through any formal compliance and transfer money without going to any bank or financial institution.
Moreover, cryptocurrencies are highly volatile and give exorbitant amounts of money in return just for a small fraction of money, too, concisely. This high probability of making quick money captivates many people towards cryptocurrency. Everyone wants to test their luck in cryptocurrency for high returns. However, people can also face a drastic loss in cryptocurrency because of its volatility. But the stories of people becoming a millionaire overnight are attractive enough to keep people optimistic towards cryptocurrency.
Furthermore, the ease of transferring money from one country is at an unprecedented level right now. A considerable proportion of credit goes to cryptocurrency because it is decentralized and easy to transfer from one country to another, breaking the barriers of all government rules and regulations. But Suppose an individual wants to transfer his money from one country to another by following the traditional foreign exchange methods. In that case, he has to follow all the government taxes and also may have to pay high taxes as per the government regulations.
Also, cryptocurrency’s price depends on great personalities and financial gurus such as Elon Musk and many more. So a general awareness of what is going on in the world and the primary trends people are following in recent times help individuals predict the price of a particular cryptocurrency. Moreover, the probable anticipation of the price developed a robust notion among people that they can book profits by just being aware of the world news has helped cryptocurrency rise.
From the recent trends and analysis, it can be presented that the rise of cryptocurrency was due to its decentralized nature, ease of business, trust, and volatile nature. Therefore, an investor is very much convinced in investing a proportion of money in cryptocurrency in the hope of profit. However, consequences can also be catastrophic.