Where it took more than 13 years for companies like Amazon to give 100 times return on their investment, some cryptocurrency gave it in 5 months. Yes, Dogecoin, one of the cryptocurrencies, has given 10000% return in mere 5 months. The cryptocurrency market has been continuously making it to the news for one reason or the other, people are continuously tweeting about these currencies. It is important to understand the basics of cryptocurrency and its mechanism. Cryptocurrency is a decentralized and digital payment system that is used to buy goods and services. You must use real currency to buy these. There are more than 9800 cryptos according to Coinmarketcap.com. The first cryptocurrency was founded in 2009 named Bitcoin by Satoshi Nakamoto using mathematical equations. These currencies use block chain technology. Blockchain technology is a decentralized type of database used by a large group of people to store related information on different computers. It is used to store data of numerous transactions. These recent transactions form a block which is then connected with previous blocks to form a blockchain and it goes on. Cryptocurrencies are not created randomly they must be mined, not like gold or steel mining from land but by using computers. Mining of cryptocurrency is the gathering of these currencies by solving complicated mathematical equations. You gain crypto tokens for solving the mathematical/cryptographic equations. The process involves adding transaction records to public records and validating the data blocks of the blockchain. So, you can do mining to get cryptocurrency without paying for them. For crypto mining, you need good computers which can work at tremendous speed to solve those equations before others solve them. The mined equation is firstly validated and then the payment for the work is done. Let us know how cryptocurrencies affect environment. Mining requires computers to solve the equations, validate, and record the transactions. These computers need to be huge and powerful, so they require a tremendous amount of electricity. Mining requires most of the energy consumption. If we were to calculate the energy consumption on mining, it would be more than the consumption of many countries. Most of the electricity is generated using coal which causes high emission of carbon dioxide, which is a big concern. Still, the rising crypto prices are luring people to join the mining process and gain those tokens. 2021 has been a good year for crypto as big leaders like Elon Musk have been tweeting about these currencies. Elon musk (Dogefather) has tweeted about Dogecoin many times which has helped Dogecoin to grow 100times in 5 months. Price of Dogecoin made an all-time high of around 58rs recently and then fell drastically because Elon Musk called it as “hustle” in his Saturday Night Live (SNL) on 8th May. Elon musk on 13th May 2021 stated that Tesla will not accept Bitcoin for the transaction as it uses a high amount of energy which can be hazardous for the environment, which has caused a sudden fall in the price of Bitcoin. This fall has been a blessing for smaller cryptocurrency which consume less energy for mining and transaction. The huge increase in prizes of cryptocurrency has raised the question of the legalization of cryptocurrencies by the country. Many countries along with Japan, the USA, Germany, France, and Canada have already legalized the use of cryptocurrency, though it does not mean that crypto will replace their traditional currency. Some countries like Algeria, Bolivia, Ecuador, Nepal, Bangladesh, and Macedonia have declared cryptocurrency illegal. India has not declared cryptocurrency illegal, but neither has it legalized it. Nirmala Sitharaman (Finance Minister of India) said that “Not all windows closed for cryptocurrency.” India will think and decide what must be done about cryptocurrency. The Indian investors are increasing rapidly in the cryptocurrency market as you can buy, sell, and mine cryptocurrency even though it has not been accepted as an official payment system. Seeing the consistent rise in the prices of cryptocurrency everyone has turned their eyes towards it as an investment. The reason for the consistent rising of price is due to its limited supply. The supply is going to stop and then that fixed number of currencies will move in the market. Thus, this can be a good investment as a digital asset in future. The lack of stability is the concern of people as one will always have to pay more price for the same currency. Cryptocurrencies are prone to hacking and online crimes. Many currencies are entering the market and not all are reliable as many of them will crash and only a few will succeed. Thus, one must study the crypto well before investing in it. Thank you.
Very well written
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