Some experts call cryptocurrency a gamble, risky and worthless. At the same time, other experts view it from rose-coloured glasses. Cryptocurrency started back in 2009. Cryptocurrency is an online currency, which means no exchange of physical money. Everything is done online, from storage to earning it to using it. The person or the group who invented this is unknown. The idea was published in a white paper. The publishing author was a pseudonym.
Since then, the finance and banking sector has changed. Some banks started buying bitcoins also. Large giants such as Tesla have given the option of buying their products using this currency. Even Wall Street and the big banks are taking an interest in cryptocurrency. Only time will tell how it will further change the buying trends for the average person.
How big is the Market Size for Crypto?
As is correct, the cryptocurrency market is highly volatile. It takes a snap of the fingers for the need to make a change. The younger generation is hugely interested in cryptocurrency. Therefore, despite volatility, crypto is still gaining popularity.
Despite everything, the market size for cryptocurrency was valued at $1.49 billion in 2020. It continues to grow and is expected to reach $4.94 billion by 2030. A steady increase in value shows the increased interest in investment in crypto money. The volatility is not stopping this market from growing. Its increased operational efficiency and transparent system are driving forces for the increase.
As crypto is volatile, everything affects its value either positively or negatively. For example, just recently, Elon Musk bought $1.5 billion bitcoins. This increased the market size to be forecasted at over $800 billion. So, the market size of cryptocurrency is as volatile as the currency is itself.
The Impact of Cryptocurrency
Cryptocurrency has impacted the way businesses conduct transactions. It has altered the way a bank handles data and client information. While it is premature to say if this will become a success, cryptocurrency has known its presence. Over two thousand types of cryptocurrencies are available in the market. Once denounced as a tool for criminals and speculators, it has come a long way to establish itself as a legitimate currency.
Financial Impacts
Since 2009, the use of cryptocurrency has steadily increased. Its autonomy and transparency are winning skeptics over. Cryptocurrency uses blockchain technology. This means that there is no need for third-party intervention. Sellers and buyers can carry out a transaction using crypto. So, some experts see this as a threat to a developing economy. They believe that the role of banks will end.
Furthermore, there is a lack of trust among the older generation for using this online currency. The biggest issue is crypto volatility. Cryptocurrency is very volatile and can be a risky investment. Cryptocurrency has been free of any regulating authority.
Apart from all these comments and arguments, Cryptocurrency is getting accepted in some places. El Salvador adopted Bitcoin in September 2021 as a legal currency. Many other countries are regulating cryptocurrencies. Some are even developing their digital currency and making separate banks for them. Businesses find that crypto helps them avoid any regulatory oversights. It helps them do quicker transactions.
Environmental Impact
Cryptocurrency has been under fire by environmentalists. Cryptocurrency requires mining to get crypto. Mining requires a robust GPU and a lot of energy. This produces a lot of heat and e-waste. Mining requires a lot of computational power for storing data. Cryptographic puzzles need to be solved in mining. These are energy-intensive computations. For example, BBC reported that the famous cryptocurrency, Bitcoin, uses 121 Terawatt-hours of electricity every year. This is more than the energy consumed by Argentina yearly. Digiconomist found that Ethereum uses as much power as Qatar.
This means that fossil fuel consumption has started increasing. China runs on coal-powered electricity. China is the most significant player in mining activities. CNBC reported that bitcoin mining accounts for about 35.95 million tons of carbon dioxide emissions each year, about the same amount as New Zealand. This does not mean that all cryptocurrencies need mining. There are some which do not require this computational method for acquiring them. Some examples are EOS and Cardano.
Benefits of Using Cryptocurrencies
Regardless of the skepticism around cryptocurrencies, there are some clear benefits of using them. Some of these benefits are going to be discussed in this section.
User Autonomy
As stated before, cryptocurrency is free of any regulatory authority. Unlike regular currency, risks and restrictions cannot be imposed on cryptocurrency. In the past, many banks have been part of the boom-and-bust cycle. Customers of these banks are not in control of their own money. So, crypto gives users autonomy. The price and share prices are up to the users. The governmental policies do not have any influence.
Pseudonymous Transactions
Cryptocurrency transactions are pseudonymous. This protects the personal details of all involved parties from getting shared. The blockchain address is the only identifying detail. A single user can have multiple blockchain IDs. Apart from this ID, no other detail is required for a transaction.
Peer-to-peer Transactions
Peer-to-peer means that the payments can be sent or received from any part of the world. Both the users must be on the same cryptocurrency network for this transaction. There are no approvals required unless a regulatory institute is being used.
Fee-less Transactions
Cryptocurrency transactions have no banking fees. There are no minimum balance fees or account maintenance fees. Overdraft fees, returned deposits, and other transactions are free of cost also. There are low international transfer fees which is an advantage for travellers.
Mobile Transaction
A user can make payments via cryptocurrency anywhere. All they need is a good internet connection. This saves them from taking a trip to the bank.
Secure Transactions
The transactions are secure due to strong cryptocurrency encryptions. This is known as cryptography. This currency is not physical, so it is safe from thieves. It is impossible to steal crypto without wallet keys.
Challenges of using Cryptocurrency
Cryptocurrency is still an immature concept. So, naturally, some challenges need to be resolved for the users. Some of these challenges are discussed down below.
Volatility Issues
The volatility of crypto remains the most significant threat for it. Cryptocurrencies have the potential for incurring substantial losses. It is a precarious investment where users can lose all their money. It could take a few minutes for the market to change and incur a huge loss. A person investing in crypto needs to be mentally prepared for the volatile market.
High Risk of Loss
If the hardware breakdown or crashes, then the currency is all lost. If the wallet gets a virus, the currency is lost. There is no way to recover from this issue. This can make a crypto investor go bankrupt. The coins are lost forever, and no one else can claim them.
Scam Issues
As cryptocurrency is unregulated, scammers can use the internet and cheat crypto users. The regulations differ in different countries, making users vulnerable to scams and frauds.
User Protection
The system is still with bugs. Some of the issues are still being discovered. Since crypto is still new, it will take time to perfect everything.
Is It Worth Investing?
Cryptocurrency is still very risky and very volatile. It will inevitably get regulated. This will help control volatility issues. The fact remains that this is all still a few years away. Experts are still double-minded about the success of cryptocurrency. This means that getting opinions from existing investors and financial analysts needs to be seriously considered—the person investing needs to start small to avoid a massive loss in case of a market crash.
Seeing that Wall Street, banks and some giant companies are investing, it could be worth taking a risk. Governments will regulate this currency at some point, so there is some hope for success. If the investor does not put everything in crypto, they should try it with the proper hardware and system.
Mashkraft Role for Investment
Mashkraft has provided FinTech solutions to clients in several countries. Our clients are in Africa, North America, Asia, and Europe. We can help our clients develop a solution for their crypto needs. We can provide them with hardware and software information for mining. Stock Target Advisor is a subsidiary of Mashkraft. You can visit the website and get information regarding cryptocurrency for investment. Contact us, and we will provide you with solutions.
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