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Bitcoin was invented in 2007. It is the world's first decentralized currency. This type of currency is accepted in many countries and governments around the world. Because many countries are attempting to catch up with this breakthrough technology, cryptocurrency has the potential to become a new kind of currency in the world (Adams, 2016).
According to experts who have conducted numerous studies, it is apparent that by the year 2019, cryptocurrency will be used as a global currency. Experts predict that there will be approximately five million active bitcoin users in 2019. Out of this five million, nearly three million of the users are based in the United States of America. It has also been estimated that it is possible for a cryptocurrency to be among the most significant reserve currency in the world by the time it reaches the year 2030. This is because exchange rates and money fluctuates typically depending on the external factors for instance; economy, politics, transaction trends and stock market trading (Antonopoulos, 2105).
Cryptocurrency can become a global currency also because it helps in minimizing frauds. It is very difficult and very challenging to counterfeit digital currency. When fraud is reduced, it also becomes easy to identify a particular theft. Cryptocurrency only allows credit cards to operate on a pull basis (Berlatsky, 2015). This means that it will be very difficult for ones credit card to be debited without the owner getting the information. In this kind of currency, there will be no need for third parties when dealing with real properties.
Money has very many characteristics. First and foremost, money is a store of value. When talking about a store of value, it means that money can be saved and used later in buying other things (In Lee, 2015). In short, it can be exchanged for something else. If something can be kept, it means it can be stored and retrieved to be used later on. Money is also a store of value because it has its purchasing power in the future. Money also has a store of value as its characteristics because of its liquidity nature. This means that money can be exchanged easily for other goods in the market. For instance, when one wants to buy a car or food, he/she can use the money to buy those commodities.
Money also has a medium of exchange as characteristics. Money can be used to acquire other commodities. When talking about a medium of exchange, it means something that can be used in exchange for any good or product. For instance, if one wants to buy a cow, he/she can exchange the cow with what he/she have, but it will also depend if the owner of the cow wants what the buyer has. On the other hand, when one has money, he/she can be able to buy the cow and when the owner of the cow receives that money he/she can go and use the same money to buy whatever he/she wants (Lee & Deng, 2017).
Money also has a unit of account as its characteristics. Items, goods or commodities have value. The value of a cow cannot be the value of a chicken, and that is why money is said to be a unit of account. It can measure the value of anything. Things of high value will always have high monetary price unlike products of low cost.
There are regulations and measures that are used to reduce its volatility. Regulations that make digital currency not being used by many states that have not yet adopted the digital currency exist. This is because there are also disputes over cryptocurrency being money or a commodity, exchange, or a means of payment and whether it is essential for a state to pay tax for the cryptocurrency. There are other countries such as Australia where the cryptocurrency is not seen as a financial product. This insinuates that cryptocurrency can be bought, stored, and later exchanged without the users necessarily obtaining a license. In Australia, this digital currency will soon be legalized and become the national currency. Hong Kong is another country that has no many regulations for the cryptocurrency. This means that the digital currency can be used in those countries without paying tax to the government of those countries.
The European Union has not come up with regulations that hinder the use of cryptocurrency as currency in their country. This means that the digital currency can be used in this country without paying tax to the government of this country. China has very many mining pools. This is the reason as to why local products and electricity from that country are very cheap compared to other countries. There has been a prohibition of mineral activities in China, and this also means that cryptocurrency has been prohibited in China (Szmigielski, 2016).
Bitcoin mechanism is among the digital currencies. There are very many cryptographic technologies that make bitcoin. This is how bitcoin works. Each coin is usually associated with the current public ECDSA key of the owner. When one sends a bitcoin to someone else, one creates a transaction message of which that person attaches the public key of the owner to the number of coins that he/she needs, and that person will be required to sign with their private key. This transaction is therefore broadcasted to the bitcoin network. This will let everyone who uses bitcoin know that the new owner of the bitcoin is the one having the original keys. The signature on the message will verify to everyone that the information is authentic. The history of a transaction, which is complete, is therefore kept by everyone who is using bitcoin. The whole record of the transaction is then saved in a blockchain. These are series of files called blocks. All the computers in the bitcoin network have copies of the blockchain. When bitcoin information is being passed from an old block to a new one, the copies of the computers found on the bitcoin network are updated. Each block has typically to meet specific requirements that make it very difficult to come up with a valid block (Vigna, Casey, & Pratt, 2015).
In conclusion, Cryptocurrency was created in the year 2007. It is the first decentralized currency in the whole world. In many countries and states around the world, this kind of currency has been accepted. Cryptocurrency can become a new form of money in the world because many countries are trying to catch up with this innovative technology. Money has very many characteristics which include being used as to store value, as a unit of account, and as a medium of exchange. Bitcoin mechanism is among the digital currencies. There are very many cryptographic technologies that make bitcoin. This is how bitcoin works. Each coin is usually associated with the current public ECDSA key of the owner.
Adams, M. (2016). Blockchain: The history, mechanics, technical implementation and powerful uses of blockchain technology.
Antonopoulos, A. M. (2105). Mastering bitcoin: Unlocking digital cryptocurrencies.
Berlatsky, N. (2015). Bitcoin.
In Lee, D. (2015). Handbook of digital currency: Bitcoin, innovation, financial instruments, and big data.
Lee, D., & Deng, R. (2017). Cryptocurrency, FinTech, InsurTech, and regulation.
Szmigielski, A. (2016). Bitcoin essentials. Place of publication not identified: Packt Publishing Limited.
Vigna, P., Casey, M., & Pratt, S. (2015). The age of cryptocurrency: How bitcoin and digital money are challenging the global economic order.
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