What Happens to Cryptocurrency: From Rise and Fall to State Recognition

From buying pizza to crypto millionaires

Bitcoin Saw the World Almost 13 Years Ago: It Was Then A Person Or

A group of people, still not known for sure, under the pseudonym Satoshi Nakamoto, published an article called "Bitcoin.It described in detail how bitcoin works and what operations can be carried out with the first digital coin.What the future crypto enthusiasts liked was the complete freedom of banks and governments, as well as inflation.But today, Bitcoin, along with other cryptocurrencies, is at the center of public and government discourse.

Bitcoin is based on blockchain technology — a continuous chain of blocks with information about all transactions made.The advantage of this method of storing data is that it can be restored only if all participants in the chain are present.

Another feature of bitcoin is the limited number of digital characters. As conceived by the authors, the maximum possible "create" 21 million bitcoins.

Issue or emission of digital signs takes place formining account. Unlike the relatively simple printing of fiat money, mining is a solution to very complex mathematical problems, as a result of which a new block appears in the blockchain chain.

Humanity, having created bitcoin, literally itselfoutsmarted - by getting rid of the gold equivalent of the new generation of money, miners doomed themselves to huge costs associated with the search for new blocks. The mining reward, in turn, decreases. In 2009, miners received 50 bitcoins per block, three years later - only 25, and in 2017 - about 12. Experts assume that the last bitcoin will be mined in 2140, today 18.5 million cryptocoins have been "mined". The value of the first bitcoins was calculated in thousands - a thousand coins for $ 1.

The first purchase with bitcoins dates back to 2010.A programmer from the United States (bitcoins have long been considered fun for geeks - "High-tech") Laszlo Hanich bought two pizzas, paying about 10 thousand bitcoins for them. Today it is $ 65 million.

The growth of the Bitcoin rate began in 2011, when itreached $10 for the first time. Interest in cryptocurrency began to grow, especially among those who saw potential in the new technology. At the same time, numerous hacker attacks and cases of theft began, which significantly undermined trust in the crypt - cyber thieves stole 25 thousand bitcoins from the founder of the Bitcoin Forum. In 2013, the rate of the digital currency reached the $100 level, and after the American online game publisher Zynga became interested in bitcoins, the coin began to cost from $600 to $1,000. Interest in bitcoin (and blockchain) was fueled by the financial crisis of 2008–2012, when distrust in traditional financial institutions grew, including due to the injection of huge amounts of fiat money into the market. Decentralized currency has become a possible salvation for many from future economic collapses.

2017 has become a landmark year for bitcoin - at firstdigital currency exceeded the cost of a troy ounce of gold (a unit of mass equal to approximately 31.1 g - "Hi-tech") - $ 1 235, and then Japan declared it a legal tender. It was impossible to keep up with the digital currency further: investors reacted violently to the first official recognition of the currency and raised its value to almost $ 5 thousand.

Each block of the blockchain network holds 1 MBinformation about transactions. This limitation made it possible to encrypt records more securely, but at the same time made scaling much more difficult. With such a block size, it is possible to correctly process from three to seven operations per second, and the formation of a new block takes up to ten minutes on average. The system simply did not keep pace with how quickly the cryptocurrency developed - the number of transactions over the years has grown from 100 thousand to 300 thousand transactions per day.

Despite the fact that in 2017 China officiallybanned ICOs of cryptocurrencies, Bitcoin continued its rapid growth, exceeding $10 thousand. According to experts, the limited emission of Bitcoin and the lack of any regulation in the crypto market played a role in this. In the same year, its capitalization amounted to $270 billion, which allowed the digital currency to enter the top five largest currencies in the world, and the Chicago Commodity Exchange even launched trading in long-term contracts for Bitcoin. News about the first Bitcoin millionaires created a real stir in the market - December 2017, Bitcoin costs $20 thousand. The first crypto exchanges began to appear where it was possible to trade cryptocurrencies. State authorities began to advocate strict regulation, even a complete ban. Many analysts predicted that Bitcoin would become a bubble that was about to collapse.

Black Tuesday really happened whencryptocurrencies (by that time alternatives to bitcoin had already appeared on the market) literally overnight lost half of their value: bitcoin dropped to $ 9.6 thousand, ethereum from $ 1.4 thousand, which was then a record for him, to $ 805, ripple began to cost less than a dollar, having lost almost $ 4 in value, and Bitcoin Cash - from $ 3.9 thousand to $ 1.4 thousand. Investors ran to sell cryptocurrencies for fiat money in order to save their savings. For many in those years, crypt became an analogue of offshore companies. Therefore, the amounts that flowed into the crypto market were truly colossal.

There are still two years left for Bitcoinpessimistic. Social networks were up in arms against the crypt - in 2018, advertising of digital currency was banned by Facebook, Twitter and Google, and then the miners staged a real flight, starting sales of their businesses. The result is minus 80% of the maximum values ​​of 2017.

In the US, authorities are concerned about the impact of cryptocurrencies:The Securities and Exchange Commission has launched a fight against bitcoin ETFs, and the launch of Bakkt's bitcoin service for institutional investors has not aroused optimism on either side.

Serious growth started during the pandemic - marketsfell, and the crypt, in contrast to them, grew. Over the year, bitcoin has gone from $ 3.8 thousand to $ 19 thousand. Large investors began to actively invest in bitcoin against the background of the devaluation of the dollar. The result of BTC in 2021 reached $ 63.6 thousand, however, then there was a correction, but it is difficult to underestimate such a result. Bitcoin is now worth $ 39.9 thousand.

Crypt "catalysts"

Like any other currency, Bitcoin, or rather its volatility, is highly dependent on the support of market influencers, news from companies and banks.

Approximately 15% of Americans currently own a digital currency such as Bitcoin or Ethereum. Most of these investors have purchased digital assets in the last two years.

Largely public history of supportcryptocurrency began with MicroStrategy CEO Michael Saylor being the first among his colleagues to endorse Bitcoin. True, he did not do this in the most positive way. Sailor was seriously alarmed by the emergence of cryptocurrency and predicted the complete defeat of fiat money. Despite the fact that his statements caused rather bewilderment, it led to a snowball effect.

Another human catalyst for cryptocurrencies - ElonMusk. The Techno King and CEO of Tesla is adept at using his social media and headlines to advertise cryptocurrencies. So his name became literally explosive for the Dogecoin memo coin, and then Musk bought $ 1.5 billion worth of bitcoins. Tesla recently announced that customers can buy cars with bitcoins. True, then the company changed its mind and thereby brought down the crypto rate by 15%.

One of the first adherents of cryptocurrencies waspioneer of digital transactions PayPal. It provided people with the ability to buy and transact with cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. While crypto enthusiasts have criticized PayPal for preventing users from transferring their digital assets to a private wallet, it is possible that this feature will appear in the future.

Visa and Mastercard are the world's two largestpayment systems have also publicly approved the use of bitcoins. For example, Visa allows stablecoin transactions on the Ethereum blockchain. Mastercard followed suit and recently announced that cryptocurrency transactions will be available this year.

Crypto institutionalization is also promoted by crypto-exchanges - for example, Currency.com, which have already become a platform for trading with digital and fiat money, tokenized exchange-traded assets.

Promising cryptocurrencies, which are called the most profitable today

  • Dogecoin appeared as a meme with a dog on the avatar.But in seven years, the capitalization of the comic cryptocurrency reached $ 78.8 billion. Elon Musk himself contributed to this, who published on his Twitter message that his company SpaceX will launch Dogecoin into space - after the post was published, the cost of the altcoin increased by 20% in half an hour.
  • Bitcoin rival - Ethereum Classic, hard forkether - appeared due to the division of the community, part of which was in favor of optimizing the functionality. As a result, the crypt has shown a monthly growth of 500% during its existence. And the largest altcoin in terms of capitalization reached $ 3.5 thousand in May 2021.
  • OKEx crypto exchange utility token also worksbased on the Ethereum blockchain. It is used to calculate trading fees, participate in voting, and become a verified merchant. The market capitalization of the token reached $9.7 billion.
  • Bitcoin Cash emerged four years ago after the split of the main Bitcoin network. Today, the altcoin is worth $ 542.
  • Blockchain platform for issuing cryptographicWaves tokens showed rapid growth in April 2021 - rising from $ 10 to $ 43. The platform allows you to create your own cryptocurrency and conduct ICOs.

Why tokenize stocks and paintings

Another important part of applying blockchain totrading on a crypto exchange - tokenization of assets. In essence, this is the same process that was applied to the idea of ​​a currency by creating cryptocurrencies. Developers create a token and then link it to the price of a security, provided that one token equals one share. Moreover, today, when the NFT token market has developed, it has become clear that everything can be tokenized: from videos to works of art.

The most important advantage of tokenizedassets - a complete transition to the blockchain: the technology protects all records, it is almost impossible to forge or steal them. The digitalization of working with assets also makes life easier for investors and crypto exchange workers. As a result, costs are also reduced - market participants save on expensive bank transfers and bypass intermediaries by buying tokenized assets directly from issuers.

You can buy or sell tokens today atMany crypto exchanges, for example, have such opportunities on Currency.com. Many crypto exchanges provide commission-free trading conditions to owners or buyers of tokenized assets.

The same technology was used to create a newversion of bitcoin, the need for which arose as a result of the growing popularity of the decentralized finance (DeFi) market. Bitcoin tokenization made it possible to transfer the digital currency to the ERC-20 ETH format, in which it can already be used in DeFi: for example, it can be used in decentralized projects to make a profit through blocking them for the needs of protocols.

What are the prospects for cryptocurrencies

Despite the success of cryptocurrencies over the past two years, it is difficult to make any forecasts: the crypto market behaves too unpredictably, especially in crisis situations.

However, the blockchain is expected to continueits integration into financial markets. The developers are already working on the next generation protocols - Ethereum 2.0, Algorand, Cosmos, Polkadot, which means that in the near future there will be second-tier scalable solutions for existing blockchains. In addition, experts predict the consolidation of blockchains at all stages of the market chain, from developers to users and the top of the market.

Technological advancement of blockchains will bringbig dividends for developers: in addition to forks, analysts predict a wave of mergers and acquisitions, when, as one blockchain becomes obsolete, each token will become exchangeable at a fixed rate for another acquirer token. Most likely, there will be as many tokens as there will be open source companies on this market.

Promotion will be a separate areanon-commercial, but useful services for mankind - the use of crypt for non-commercial purposes. Crypto startups will become commonplace: by the end of the first half of the 1920s, almost every tech startup will have a cryptocurrency component at its core.

Relations with government regulators duringmany countries remain vague or unclear. Bitcoin is legalized or at least allowed for use by individuals in Japan, USA, Singapore, Switzerland, Canada, Denmark and Sweden. In Russia, the situation remains unsettled. The reasonable fear of many states that crypto may completely replace fiat and make banking systems obsolete atavisms is well-founded. It is not yet completely clear whether Bitcoin will receive legalization around the world, or will remain in the shadow segment where the state seeks to tightly control the financial market.

What we already see is a real revolution infinancial sphere. Many analysts tend to call this a colossal disaster for investors. But one thing remains clear - cryptocurrencies have become a new technological response to the inability of an aging economic system to respond to modern challenges - be it a pandemic or a shortage of chips. Because the crypt is based not on natural hydrocarbons, but on the "gold" of the future - mathematics.

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