In 2017, cryptocurrencies achieved one of the most spectacular performances ever seen in a financial market. Most of them have grown by tens of thousands of percent. In barely twelve months, Bitcoin has gone from $1,000 to $20,000, or 2000% growth. Verge, another cryptocurrency, has grown even more spectacularly: more than 1 million% in a few months. An almost frightening prospect of gain given the fact that no other financial market is able to offer such a return.
Cryptocurrencies have been expanding their influence on the financial market for several years. Without banks and based on payments between individuals, what does the future hold for virtual currencies? Before going further, click here to get more information. By seeking as much information as possible, you will be able to minimize risk and avoid unnecessary mistakes. Got it? Continue by reading the following paragraphs!
Cryptocurrencies: decryption
Cryptocurrency is a concept that appeared in 2009 with the creation of Bitcoin. It is a virtual currency. You will therefore not find any physical expression of the existence of this currency, neither coins nor notes, nor cards or bank accounts.
It works thanks to a network of exchanges between users, who are both senders and customers. The digital currency is not pegged to any conventional value such as gold or the dollar and does without a central bank. It is credited with qualities of transparency and security.
Another central concept of this device: the blockchain, or account book, which lists all the transactions carried out. It is encoded by the users themselves and accessible to all. It is this that underlies the opportunity to override the services of a control body. The production of currencies is done gradually and the final volume is capped.
In this way, virtual currency benefits from a certain scarcity, like precious metals, and avoids hyperinflation. The value of a digital currency, like any other, depends on the law of the market. In other words, it is the mechanism of supply and demand that will determine the market value of a currency. On the security side, this form of currency uses cryptographic techniques which makes it, supposedly, tamper-proof.
It has been remarkable
After the first beginnings of the concept in the 90s, the very first cryptocurrency, Bitcoin, appeared in 2009, today known worldwide. In recent years, the meteoric rise of Bitcoin has been remarkable, propelling its value into the upper spheres at nearly €60,000.
In fact, Ethereum is the second most common cryptocurrency in the world. Initiated in 2011, it has brought technological innovations, particularly in terms of smart contracts. These computer protocols offer more security and reduce transaction costs. Other major virtual currencies are doing well, such as Ripple, Dogecoin and Litecoin. Many, many digital currencies have followed the trend. There are several thousand of them today. They differ in their market coverage, the technologies used or their stability.
What future for payment between individuals?
Now well established on the market, for the most prosperous, what place will cryptocurrencies take in the future? Is virtual money the future of a conception of decentralized finance? Are we taking a turn towards the extension of 100% dematerialized payments? Will payments between individuals now be the prerogative of digital currencies?
The position of traditional players
A good indicator of the future of cryptocurrencies can be seen in the attitude of official financial players. Traditional banking sectors are beginning to integrate virtual currencies, giving them more power and legitimacy. Even PayPal, the famous online payment device, now allows Bitcoin payments.
The expansion of uses
Another favorable sign for the development of digital currencies is that the possibilities of use in everyday life are clearly expanding. It is enough to have a phone at hand to carry out many commercial transactions using Bitcoin, for example. Buying a plane ticket or booking a hotel room, buying a car or eating in certain restaurants, this can now be done without hard cash.
A field that is structured
At the end of 2020, the University of Cambridge released its 3rd study* on cryptocurrencies, arguing in particular that a sector is in the process of being structured. Major players are growing, acquiring smaller initiatives, and taking a consolidated place in the market. A sustainable economic profile, therefore, which suggests a rather flourishing future.
Values in tune with the times
It is not a question of financial value here, but of human and lasting values. Virtual currencies have two remarkable advantages from an ethical point of view: shared power and accessibility. Thanks to cryptocurrencies, there is no need to have a bank account to be a player in the financial market.
A telephone and an internet connection are sufficient. This drastic change opens new horizons for many people around the world. Putting an end to the notion of central bank or control body, the concept of exchanges between individuals and transparency integrates the unprecedented idea of power in the hands of all. A new vision of the market that appeals to many users.
Investment companies are betting on virtual money
The investment choices of specialized companies reflect growing confidence in the future of cryptocurrencies. Investors view Bitcoin as a safe haven and regard its relative longevity as a guarantee of stability.
A lower cost
Among the strengths of the mechanism of digital currencies, the absence of intermediaries and technological protocols have the advantage of driving down fees. Another good point for accessibility to the greatest number.
The risks
Despite all their promises, virtual currencies carry very specific risks. Evolving in the Internet network, they run the risk of being hacked and stolen. But it is above all the question of volatility that worries the experts. Digital currencies are not subject to any regulation and obey only the law of supply and demand. The result is radical and rapid changes in values that can have serious consequences.
Cryptocurrencies are gradually establishing themselves on the financial market. Some of them get phenomenal results. In a universe that is going through dizzying virtual expansion, it is hard to imagine being able to circumvent the complete digitization of financial mechanisms. Despite fears about the issue of volatility, digital currencies seem to be shaping up to a bright future, attracting the attention of both large investors and individuals.
