The cryptocurrency system has now become a $200 billion industry. The history of cryptocurrency extends back to the 1980s with advancements in cryptography – ultimately leading to the formation of encryption techniques that are designed to secure the network of cryptocurrency.
In 2009, Satoshi Nakamoto mined the first Bitcoin. Nakamoto mined it on a decentralized network and Litecoin was launched in 2011. After one year, Ripple was founded in 2012. Then, in 2013, Bitcoin became popular and the price of one Bitcoin reached $1,000. Smart contracts were launched in the crypto ecosystem during 2015 when Ethereum was launched.
In 2017, there were more than 1,000 cryptocurrencies listed and in the same year, the price of one Bitcoin crossed $10,000 for the first time in its history. The price of a single Bitcoin reached $20,000 during 2017. Then, EOS offered an infrastructure based on blockchain for DApps (decentralized applications). Currently, more than 5,000 cryptocurrencies are circulating in the market.
We can also consider crypto as an investment in the emerging financial system- DeFi (decentralized finance). Decentralized finance (DeFi) is an alternative financial system. It is built on a public blockchain that offers higher accessibility as anyone can connect to this system. Moreover, transactions are publicly available which enables higher transparency across this financial system. The following are some of the practical advantages which are being applied across the crypto ecosystem.
Bitcoin, Stellar, and Ripple are used for buying products and there is no need for a trusted third-party in these transactions.
As the total supply of various cryptocurrencies such as Bitcoin and Litecoin is limited, this scarcity impacts the value of these cryptocurrencies.
DAI, Gemini USD, and USDC are some of the digital currencies that are usually pegged to a currency or commodity like gold, etc.
The technology behind crypto is cryptography which enables the owner of a cryptocurrency to remain anonymous.
Cryptocurrencies like Bitcoin, Stellar, and Ripple can enable those people who do not have access to a bank to enter the financial system.
Bitcoin also has similar attributes to money. It can be used as a medium of exchange or unit account.
DApps allows people to develop applications without a central authority. EOS, Ethereum, and Tezos are some examples of DApps.
Globally, private and public investors recognize the potential of the crypto ecosystem across various domains. The primary private participants in the field of cryptocurrency are listed below.
Crypto Hedge Funds and Harvard Endowment Fund are institutional investors of the crypto ecosystem.
Coinbase and Bitstamp are the two most popular cryptocurrency exchanges.
Global Digital Finance and Crypto Valley Association are the famous public organizations considered to be the primary participants in the field of crypto.
The anonymized transactions of this system protect the data of users. This system is also providing a new financial system for 1.7 billion unbanked people across the globe. This system is more secure and smart contracts may eliminate manual and administrative work. This system is creating second-order impacts on the financial system of our world. However, cryptocurrency is ultimately helping to transform the financial system. Take a look at this infographic from VC for more insights.