A cryptocurrency, also known as digital currency, is created and managed through the use of encryption techniques and methods called cryptography. It all started with the creation of Bitcoin in 2009. Back then, a rare number of people knew about the existence of Bitcoin, until it captured the significant media attention in 2013. Nowadays, the situation is completely reverse, since this cryptocurrency reached its peak. Considering the recent development of digital currency market, traders and investors now have more options and a lot of cryptocurrencies to choose. But, let’s look at the prognosis and what future holds for us.
We are all aware of its popularity, and a lot of investors are crazy over Bitcoin. This cryptocurrency is made through a process of mining, where people use highly advanced computers to verify transactions and some complicated algorithms. At this rate, every ten minutes, 25 Bitcoins are created. These features make Bitcoin different from other flat currencies, which depend on the government. Even though flat currencies are a more secure way of investing the money, a lot of people think that cryptocurrencies are the future of the economy. The value of Bitcoin depends on the money investors are willing to pay, at a particular point in time. On the other hand, you don’t have to focus your attention only on Bitcoin because the stock market is full of digital currencies waiting for investors, you just need to find your match and follow the prognosis.
Considering that Bitcoin is a decentralized currency, it means all transactions are anonymous, and this is a fertile ground for many illegal activities, such as money laundering. This situation has attracted a lot of attention from many government agencies, and even FBI and DHS got involved. In May this year, the DHS froze the accounts of Mt. Gox, the most significant Bitcoin exchange, under the accusations that it broke the anti-laundering laws. This is an important matter to discuss, after all, you are investing your money, and you need to know where it goes and what can go wrong?
One of the largest limitations they face is what will happen with the money if a system crashes, or if virtual vault gets hacked. But, the more popular they become, the more regulations the governments will impose. Even though the number of traders has increased in the last couple of years, they are still in the minority and this a big chance for market growth. On the other hand, not anyone can trade cryptocurrency and are still required to have some basic knowledge. This complexity compared to traditional stock market will deter the majority of investors.
The most significant challenge for cryptocurrencies in the future will be to become the part of a financial system, but they need to fulfill a lot of criteria. They need to become easier so that an average consumer can understand them. In this case, they have a long road ahead of them.