The Role of Information Technology in the Rise and Fall of the Cryptocurrency

Cryptocurrency and Its Role in the Rise and Fall

Cryptocurrency is a digital asset that is designed to work as a form of exchange, and it utilizes cryptography to verify the transaction of assets, control the addition of the extra units, and secure financial transactions. Cryptocurrency is a type of alternative currency, virtual currency, or digital currency. As opposed to central banking and centralized electronic money cryptocurrency uses decentralized control. The decentralized control of the digital currency operates through the technology of distribution ledger usually known as blockchain which serves as the financial transaction database for the public. This paper will be discussing how information technology plays a role in the rise and fall of the cryptocurrency and the positive and negative of switching to the Bitcoin environment.

The Rise of Cryptocurrency

Information technology has played a key role in the rise of the cryptocurrency. However, it has also lead to its fall in some instances. Blochain is the main technology that has been used in the cryptocurrency, and it allows digital information to be distributed but not copied. Blockchain was majorly designed for the cryptocurrency even though it has many other uses in the current society. The technology has enabled the use of the cryptocurrency as the medium of exchange, and in this case, all the transaction is done in the form of the digital transfer (Hosp, 2017). This has resulted in the rise of the cryptocurrency as technology dynamically changes. Furthermore, information technology has allowed trading of the cryptocurrencies in the foreign exchange markets. There are millions of individuals who trade forex, and most of them are trading on cryptocurrencies such as Bitcoin and Ethidium. Despite the volatility of the cryptocurrencies, it is among the most currencies in the forex markets. Technology has provided a platform on which the cryptocurrencies can be traded. Furthermore, information technology has assisted people to obtain the information on the cryptocurrencies and how they are used.

The Fall of Cryptocurrency

On the other hand, information technology has lead to the fall of the digital currencies in various ways. There are several cases related to the hacking of cryptocurrencies. The use of the technology in hacking has to lead to huge losses. It has lead to most of the investors of the digital currencies having no trust in the digital currencies anymore. Also, technology has been used to scam people on the cryptocurrencies. Every year people lose billions of money due to the online scams which promise them that they will receive enormous profits after purchasing certain digital currencies such as Bitcoin (In Lee & In Deng, 2018). The scams are resulting since the digital currencies are currently not well regulated. Regulation of the digital currencies will assist in to minimize the scams surrounding them. There should also be tough regulation on the digital currencies internet platforms.

Positive and Negative Impacts of Switching to Bitcoin

There are various positive impacts of switching to the Bitcoin. First, this digital currency has higher transparency in its operations. This is because anyone can check the currency rate status and it becomes transparent and easy to keep a proper track on the operations linked to it. Secondly, the currency is not affected by the inflation. This is among the best Bitcoin features as it is entirely unaffected by the inflation. There is no chance to face any inflation with Bitcoin since its decided quantity is 21 million only. Also, there is less risk that is associated with the Bitcoin. There is low or no risk associated with the Bitcoin collapse since it is not regulated by any government authority.

On the other hand, switching to Bitcoin can have negative impacts. To begin with, there is little awareness of the use of Bitcoin. Most of the individuals are not aware and train on the use of the digital currencies. People require special sessions to gain knowledge on the correct optimization of the digital currencies in their life. There are various payment gateways that do not acknowledge Bitcoin or any other digital currency as their currency. Secondly, Bitcoin is highly volatile. The currency is volatile since there is the limitation on the count of the coins to be used. Furthermore, Bitcoin is in its development phase (Peterson & David, 2017). Even though the currency was lanced in 2009, it is still under observation. There are various potential growth channels that need to be done entirely to bring the actual Bitcoin potentiality in front of the globe. Finally, Bitcoin and all the other cryptocurrencies require internet. High-speed internet is needed to carry out transactions with Bitcoin. On the other hand, it is impossible to stay connected with the internet every time making the use of the Bitcoin difficult.

Conclusion

In conclusion, digital currencies are becoming popular in the present market scenario. The most popular cryptocurrency is Bitcoin. These currencies are traded on the website even though they are distributed and deregulated. Information technology has played a key role in the rise and fall of the digital currencies. Bitcoin is not affected by inflation and therefore switching to it is appropriate. On the other hand, Bitcoin is highly volatile.

References

Hosp, J. (2017). Crypto currencies: Bitcoin, ethereum, blockchain , ICO's & co. simply explained.

In Lee, D., & In Deng, R. (2018). Handbook of blockchain, digital finance, and inclusion: Volume 1.

Peterson, & David. (2017). Digital Currencies: Unlocking the Secrets of Crypto-currencies. Partridge Singapore.