By Suyeba Aslam
Your commercial awareness dose.
A relatively new concept, cryptocurrency is a form of currency which is virtually designed. This method is secured by cryptography, making It impossible to commit any kind of fraud or double-spend. Cryptocurrencies are built and distributed on public ledgers called blockchain technology, which is enforced by a network of computers. This also sets a record for all transactions updated and held by currency holders.
Generally, they are not authorised by any central authority, “rendering them theoretically immune to government interference or manipulation”- according to Investopedia.com. As a result of cryptocurrency holding a lot of anonymity, it is usually associated with peoples and activity on the dark web. Therefore, it is advised that buyers and sellers are extra vigilant about the underlying implications when buying this form of currency.
The most commonly known form of cryptocurrency is Bitcoin, which was launched in 2009 by Santoshi Nakamoto. By November 2019, over 18 million bitcoins were in circulation, with a total sum market value of approximately 146 billion US dollars. Till this day, it remains to be the most popular and valuable.
Other popular forms of cryptocurrencies are Ethereum, Ripple and Litecoin. Formed later on in 2015 using the compound of ether, Ethereum is the second most used and valued cryptocurrency. With a market value of 56 billion US dollars by May 2018, Ethereum had encountered a lot of major difficulties. For example, in 2016 the currency had been hacked, forcing the currency to split into two.
Another public ledger, Ripple was founded in 2012 and is much more versatile in comparison to the rest. It can track all kinds of transactions, not only those of cryptocurrency. Popular with banks and financial institutions, it has a market capitalization of up to $24 billion. With a total market value of $6 billion, the Litecoin is very similar to the bitcoin. However, the Litecoin had moved much faster in terms of innovations and development, with aspects such as faster payments, faster processing time and more transactions.
In more recent news, the world has been informed that many companies such as Facebook and PayPal plan to expand their company operations by introducing cryptocurrencies. Last Monday, head of Facebook Financial (F2), David Marcus announced that Facebook hopes to launch in 2021 an all-new cryptocurrency called Diem, alongside the social networking firm’s wallet called Novi.
The announcement had been made at Singapore FinTech Festival, where he was also addressing other questions on the new changes that will be made in the financial world for the following year ahead. Even though the Diem is referred to as a cryptocurrency, it does not share similarities to a bitcoin as it does have a central organisation behind it, whereas the bitcoin does not. Furthermore, “it is also backed by fiat currency, again a point of difference with bitcoin”, said CNBC.
As COVID-19 takes over the world, concerns arise as to whether cash and cheque transactions will reduce, pushing to a cashless society. Financial corporation, Visa believe that cash will no longer be a concept and that cryptocurrencies such as bitcoin are in the financial future. This is slowly beginning to be proven as the value of cryptocurrencies have been soaring throughout the year with more investors and financial institutions buying and selling in.
Visa has recently partnered with cryptocurrency start-up company BlockFi to release a credit card, which allows users 1.5 per cent of their fiat purchases back in bitcoin. Expected to be released in the first quarter of 2021, there will be an annual fee of 200$, in which customers can spend a minimum of 3,000$ on the card in the first trimester.
The start-up company followed the trend of many other organisations, who also had expanded their operations to cryptocurrencies. For example, PayPal in October had announced that they would allow their US customers to buy and sell cryptocurrencies in their digital wallets. Alongside, JPMorgan Chase who also announced this spring that they would extend their services by allowing crypto exchange between Coinbase and Gemini.
To keep up to date with the latest commercial news, click on commercial awareness to get your daily dose.
Donate & Support