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In the outgoing year, the cryptocurrencies
managed to truly shake the entire financial world. Despite the fact that in the
autumn, bitcoin celebrated its ninth year of existence, and financial institutions
are considering cryptocurrencies and introducing their own investment projects
for more than a year, only in 2017 the digital sphere has reached a decisive
turn of its development and has become world-wide. We observed the peak of
ICO’s popularity, and the spectacular growth of bitcoin, and the increasing
popularity of block-technologies with their integration into entrepreneurship,
and the formation of bitcoin as a full-fledged means of payment, and the
beginning of futures trading bitcoin. Undoubtedly, the most
important result of the past year is the insane increase in the prices of many
cryptocurrencies, in particular bitcoin. On November 27, the world woke up on
the doorstep of something new: for the first time in history, the cost of
bitcoin jumped over $10,000, and immediately rushed toward $20,000, so that it
could be overcome without excessive effort and suddenly go into correction. Attention
is drawn to the fact that many still believe that cryptocurrencies are a huge
pyramid or a global bubble. Only so long as the pyramid has not collapsed, no
one can assert anything with absolute certainty (Data retrived from ).

As for
today, the capitalization of bitcoin is almost $200 billion, and the indicators
of the entire cryptocurrency market exceed $570 (See
Appendix 2). That is, in 2017, the bitcoin performance actually increased
by 1500%, and the capital turnover of the whole sphere was compared with the
indicators of Microsoft from time to time. We can see that bitcoin is the most
recognizable cryptocurrency in the world of blockchain. However, if we go
further into this topic, we can understand that other cryptocurrencies also
have great potential, and bitcoin domination has fallen to 30%. (Data retrived
from ).

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It is
worth paying your attention to ripple, ethereum, neo, tron, litecoin, etc., as operations
with ripple tokens go faster and are cheaper. For a transaction with the BTC,
you will have to pay a commission of about $30, whereas an operation with XRP
will cost a few cents. Currently, Ethereum can process almost three times as
many transactions as bitcoin. Ethereum also has a low transaction fees.

look forward to the year 2018, at least in the sphere of Ethereum, about which
I can speak with the greatest certainty, will be a year of action. This year,
we will embody all the ideas related to scalability, plasma, proof-of-stake and
privacy, over which we have been methodically working and which have improved
over the last four years. Everybody in the Ethereum space recognize that the
whole world is watching our work, and we are ready to meet our expectations”
(Vitalik Buterin, 2017). Vitalik Buterin, the man who created the Ethereum
blockchain-platform, said that the cryptocurrency is the future of
cybersecurity and the economy, and with the right approach, the “ETH”
will equal the bank cards. While the blockcain is running too slowly for the
most common applications. Bitcoin processes slightly less than 3 transactions
per second, Ethereum – 5 per second. Uber makes 12 trips per second. Blockhain
needs a couple of years to equalize with Visa.

such advantages of the blockchain, we immediately ask ourselves whether the
cryptocurrencies can become the mainstream money? In Sweden, the population
almost completely abandoned cash. The country has the lowest level of
circulation of banknotes for the last 30 years of observations. It is not
surprising that the Swedish Central Bank is thinking about replacing the kroon
with the cryptocurrency. Many currencies in sub-Saharan Africa have depreciated
due to hyperinflation, distrust of the population to local institutions and
outages. As a result, in the Congo more than 90% of deposits and loans are
denominated in foreign currency and the government of Zimbabwe completely
refused coinage in 2015. Bitcoin can also be useful in regions where
governments impose strict restrictions on the use of foreign currencies from
other countries. The
government of Japan spends huge resources on transportation, collection, and
audit of paper money and J-Coin can be used to minimize costs. Furthermore, The
Japanese government legalized the use of cryptocurrency as a means of payment,
additionally, countries like UK, UAE, Venezuela, India have plans to issue
their own cryptocurrencies, tied to their currencies.

The Chinese government and South Korea intend to introduce stringent measures
to control the cryptocurrency market. It is forbidden to involve both
traditional money and cryptocurrency (
, Aatif Sulleyman, 2018). Furtheremore, The Swiss Bank, Credit Suisse, published
a study of the cryptocurrency market and found that 97% of all bitcoins are
concentrated in the hands of 4% of users. Concentration of
wealth in a small group of users – whether individuals or exchanges – means
that several key players can have a huge impact on the bitcoins market. As a
result, the market has become very prone to manipulation. Thus, for the most
part, we can explain the sharp jumps in the bitcoin rate, which closed the year
by 1300% growth with a capitalization of $320 billion. Such a concentration of
wealth reflects the situation in the global economy as a whole. Thus, according
to estimates, 1% of the world’s population owns about half of the world’s
wealth. According to analysts, this indicates the use bitcoin exclusively as a
tool for savings like gold. As a result, bitcoin turned into a net asset and over
the past year, BTC has grown from $700 to $18 thousand (Data retrived from The
increased interest in this currency from investors, including CBOE Global
Markets, which announced the launch of bitcoin futures, seems to leave little
hope of its real conversion into currency.

we can add a scandal with tethers and Bitfinex: tether transactions assume that
they are going to act fast and cheap and the price of this currency is going to
be stable as the US dollar, in theory. However, tether to dollar relationships
seemed to be weak, because 45-50 millions tethers were issued in just one week
in November. It is hardly to imagine that these newly made currencies represent
$45 million dollars, which throws out the admission about the tether’s real
value. On the one hand, there is no problem with that, if only these currencies
involved are truly backed up by dollars – there is no risk in this system. On
the other hand, the problem occures when you start thinking about how well does
tether backed up and it is really hard to rely on the assumption that Bitfinex has
adequate “resourses’ to back them up. Therefore, if these “resourses” aren’t dollars,
it could be a problem.

At the
moment, the real cost of bitcoin is $ 0. The main problem is how bitcoin works.

With its help, you can conduct a very limited number of transactions, in
addition, it takes a huge amount of electricity. People will be more willing to
spend inflation-prone money issued by the state, and bitkoyny will prefer to
save. If no one will pay with bitcoins, then they will never become a real
currency. The meaning of the currency – in stability. Probably everyone will
agree that, ideally, we would like to have more or less the same dollar on a
Friday and Monday. And although it is possible to make some money on it
(otherwise there would be no forex), any economist will tell you that the
currency is not an asset. However, the precious metal is an asset and bitcoin,
it seems, has become his digital alternative. Based
on the fact that while the “internal” cost bitcoin is zero, explains
the high volatility of the cryptocurrency. Provide bitcoin real value can only
two scenarios.

first involves using crypto currency for illegal money transactions. However,
even if some criminals get a cryptocurrency, then they convert it into the
common one.

second scenario for the appearance of bitcoins own cost implies using cryptocurrency
as an alternative to gold. However, this requires that all recognize the
“internal” value bitcoin, as it is recognized in relation to gold.

expects one of the extremes – or success in replacing gold as a universal
measure of value or a complete failure and even if bitcoin becomes widely used
as a means of payment, investors will have to forget about the astronomical
profitability of the currency.

To conclude, even
despite all the problems and negative feedback on bitcoin and altcoines, they
continue to grow at an incredible rate, and are a good opportunity to

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