Cryptocurrencies and their value
Recently the world’s media has started to report heavily on Bitcoin, which is no surprise as last week Bitcoin spiked to over $4,000 dollars for one coin (dropped to 3,900 as of today) and it only took 60 days of the digital currency to jump from $3,000 to $4,000 a few months ago. There are stories that if you invested $5 in Bitcoin back when it was opened to the public in 2009 it now would be worth $4.4 million.
But how did this digital currency space evolve? Here at Crowdholding we have looked into the history of cryptocurrency and why cryptocurrencies are so valuable.
History of the cryptocurrency
Cryptocurrencies have a longer, deeper history than the creation of Bitcoin. The origins of cryptocurrencies were born back in the 1980’s when a cryptographer called David Chaum created a secure algorithm that allowed encryption required electronic fund transfers. Chaum’s “blinding signature” laid the foundations for the future development of every type of digitalised currency transaction, whether that be a digitalised cash transfer or an alternative currency such as Ethereum.
From 1980’s through to the early 2000’s there were numerous virtual currencies, most notably was e-gold. e-gold was created in Florida and functioned as a digital gold buyer. It’s users would send in their old jewelry, coins and trinkets to e-gold and in exchange they would receive digital “e-gold” which was based on the ounces of gold. E-gold users could cash out for physical gold, trade their holding with other users or exchange their e-gold for dollars.
Fast forward to 2008, when the pseudonym of Satoshi Nakamoto released a whitepaper which detailed what is widely regarded as the first modern cryptocurrency. The whitepaper showed a concept of combining anonymity, finite supply, blockchain technology and decentralisation which we all know now as Bitcoin. Bitcoin started to be considered a proper currency after companies such as WordPress, Microsoft and Expedia started to accept it as a mode of payment back in 2010.
Now in 2017 cryptocurrencies are booming, according to CoinMarketCap, there are over 1,000 different listed cryptocurrencies that are in circulation. And in July 2017 the cryptocurrency market was valued at over $95 billion.
It has not just increased in value and the quantity of different digital currencies, but also in it’s use in society. Now there is numerous courses are emerging at colleges and you can even pay for your tuition in bitcoin. Different ways of raising capital has also been impacted by cryptocurrencies. The birth of the Initial Coin Offering is a way cryptocurrency startups can raise capital without investments or having to give up equity in their business.
Why are cryptocurrencies so valuable?
There are numerous reasons why cryptocurrencies are valuable as a commodity here we have listed some of the main benefits.
- Protection against fraud — Individual cryptocurrencies are digital and cannot be counterfeited due to the technology that is implemented. Also they can’t be reversed by the sender, such as credit card charge backs.
- Open to anyone — Approximately there are around 2.2 billion people with access to a mobile phone or the internet who do not currently have access to a traditional exchange service. Cryptocurrencies can alleviate that issue and allow everyone regardless of their location to become involved.
- Lower transaction fees — There aren’t usually transaction fees for cryptocurrency exchanges because the miners are compensated by the network. Compared to the average bank transfers. Currently the average price for a outgoing international wire transfer in the US is over 40 dollars.
- Decentralisation — Instead of having one main network hosted in one location, cryptocurrencies use a global network of computers using blockchain technology. This database records all the transactions, this is an advantage because there is no one central authority that can be hacked or be manipulated.
- Protection against identity theft — When you purchase something with a credit card, you give the merchant access to your full credit line regardless of the size of the transaction. Credit cards work on a “pull” basis where the service starts the payment and takes out the amount. Cryptocurrencies use a “push” mechanism that allows the user to send the exact amount without giving access to their information.
- International recognition — Since cryptocurrencies are not bound by exchange rates, interest rates and any other charges it can be used on a global scale. This can save money and time from the business or the individual aspect.
The future looks very bright for cryptocurrencies and the industry is continuing to grow. If you wish to learn more about Crowdholding’s pre-sale ICO click here and dive into the world of cryptocurrencies. We also have a step by step guides on how to create a wallet, purchase Ethereum and exchange it for YUPIES.
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