Cryptocurrencies have become a sensation in last decade, changing the way of life for many people around the world. Although for many regular citizens, banks, companies and even governments cryptocurrencies have been hard to comprehend. Many are just starting to see the importance of digital currency. A cryptocurrency is a digital currency or a virtual currency that can be used to make financial transactions online and in the digital world.
The difference between your country’s regular currency and cryptocurrency is that regular currency is centralized, and cryptocurrency is decentralized. A decentralized currency isn’t controlled or manipulated by big banks or a government, like centralized currency is. The value of your country’s regular currency is maintained by governments. It can be changed or manipulated through government policy. The value of cryptocurrency is decided or organically comes from the network of people who use it. Therefore, no one person or government has any control over a cryptocurrency’s value and hence it’s decentralized.
Bitcoin was the first decentralized cryptocurrency to exist and was first released as an “open source” software in 2009. Since then, across the world over 4000 cryptocurrencies have been created. Bitcoin does set the industry standard for now, as it was the first ever peer-2-peer currency that has given private users to trade is a safe and secure manner.
Bitcoin Market Size
Bitcoin, created in 2009, was the first decentralized cryptocurrency and remains the most expensive virtual currency worldwide. Other popular cryptocurrencies include: Bitcoin Cash, Ethereum, Dash, Ripple, Litecoin, Maker, Byteball Bytes or Monero. The Asia-Pacific region accounts for the largest share of cryptocurrency users worldwide.
The decentralized control of each cryptocurrency works through Blockchain, a public transaction database that functions as a distributed ledger. The size of Blockchain technology market is projected to grow to over 2 billion U.S. dollars by 2021. The size of Bitcoin Blockchain was around 149 gigabytes as of the fourth quarter of 2017. The largest Bitcoin/Blockchain companiesin the world include: Circle Internet Financials, Coinbase, 21 Inc., Ripple, BitFury Group, Blockstream, as well as Digital Asset Holdings.
The inflow of new investors in the second half of 2017 led to a surge in the price of cryptocurrencies. The price of Bitcoin, for example, experienced an increase from about 371 U.S. dollars in January 2016 to over 13 thousand by December 2017. Also, market capitalization of Bitcoin rose from a mere 0.04 billion U.S. dollars in Q1 2012 to over 230 billion U.S. dollars in Q4 2017.
The possibility of taking part in exceptionally high returns offered by the cryptocurrency market resulted in huge interest of investors. The number of users of Coinbase, one of the leading cryptocurrency exchanges in the U.S., increased from 0.4 million in January 2017 to 4.3 million by December 2017.
Cryptocurrencies became so popular that governments and banking regulators decided to intervene and warn that Bitcoin could be the next economic bubble. Some governments even prohibited the trading of cryptocurrencies due to lack of control and market unpredictability. Centralization of hashing power in the hands of a few or in a particular geographical area, are the main challenges affecting the cryptocurrency industry.
Bitcoin in South Africa
CNN reported that South Africa has the most sophisticated economy and financial sector on the continent, and the citizens are increasingly warming up to the idea of investing and trading in cryptocurrencies — despite regulatory concerns over such decentralised digital financial assets across the world.
The MyBroadband 2018 Cryptocurrency Survey — completed in April — shows that more South Africans who have never previously held cryptocurrencies are planning to invest in cryptocurrencies either by purchasing them directly or by gaining exposure to the industry through investments in related enterprises such as cryptocurrency mining.
“Of the survey respondents who do not own or who have never owned cryptocurrency, almost 50% said they plan to invest in an aspect of cryptocurrency or crypto mining in 2018,”
Global prices for bitcoin and etherium skyrocketed in 2017 before bottoming out early 2018 while prices have been volatile in the past few weeks. Prices of cryptocurrencies are susceptible to developments and regulatory issues around the digital assets across the world.
About 25% of respondents to the MyBroadband survey they “will invest in cryptocurrency” while around “15% will invest in cryptocurrency and crypto mining.” A further 7% said they would invest in crypto mining Bitcoins worth R300-million were traded on the Luno platform on 1 December.
Gareth Grobler of the other registered trading platform, ICE3X, said: “We estimate that between 200,000 and 300,00 people in South Africa are now involved in cryptocurrencies.”
But bitcoin is far from being the only cryptocurrency worth consideration; there are 1,320 cryptocurrencies available. While most have only curiosity value, there are 17 with market values of $1-billion or more that are in with a fighting chance of grabbing the growing investor attention.
Bitcoin — which gave the world tamper-proof digital public ledger technology blockchain and first appeared on the scene in January 2009 — undoubtedly rules the roost, with a market value of $188-billion, or 56 percent of a market that is worth $377-billion.
Ethereum runs a distant second at $45.4-billion. But that is pretty good going for the cryptocurrency developed by Vitalik Buterin that launched more than five years after bitcoin came into being.