The 15 years of the cryptocurrency age
Vishrut A.
Alumni- IMT Hyderabad | Management Trainee -O2C at G4S India | Tally Essentials Level 1 "A" grade | Tally Essentials Level 2 "A+" grade | Tally Essentials Level 3 certified
In 2023, investors saw the debut of generative AIs like ChatGPT, which prompted them to discuss the potential of the technology to change the future of work. Debates followed on the power of Generative AI and its ethical uses. Multinational companies have begun replacing staff with generative AI to achieve profitability, and large-scale layoffs throughout the year have dominated headlines.
Similarly, in 2008, Bitcoin was invented by Satoshi Nakamoto, and it took the world by storm with the blockchain technology. While the inventors origins are unknown, Bitcoin grew in prominence, and it was expected to change the then way of transactions and banking before UPI. It achieved USD 1 billion in market capitalisation in 2013. More cryptos followed in existence, like Ethereum, and today, there are over 10,000 cryptocurrencies in circulation.
The market capitalisation of all cryptos has achieved USD 30 billion. Of these, over 20 cryptos have a market cap above USD 1 billion, and the lesser-known cryptos like Solana have shown steadier and higher growth than Bitcoin and Ethereum.
In the past 15 years of its availability, Bitcoin has subjected its investors to massive shocks. It rose to USD 20,000 in December 2017 and crashed to USD 3,500 in December 2018. It achieved an all-time high value of USD 66,000 in 2021, and plummeted to USD 16,000 by the end of 2022. It has rallied by over 163% in 2023 to a value of USD 44,000 at the time of this article.
Regulation of cryptocurrency
In addition to the alarming fluctuations, the governments of India and other nations, like China, Indonesia, and Saudi Arabia, have prohibited the use of cryptocurrencies as legal tender. There is no international regulatory framework to regulate cross-border cryptocurrency transfers, just as there is much work to be done for a global regulatory framework for AI.
Ownership of cryptocurrency in India
Surprisingly, although the majority of Asia bans the use of cryptocurrency, unlike the US, Canada, the UK, and most of Europe, Asia is home to the most cryptocurrency investors worldwide. Even more surprising, India has the highest number of holders of cryptos in Asia, with approximately 94 million investors, more than all users in North America and Europe combined!
Delhi leads the pack with the most cryptocurrency investors, followed by Mumbai and Bengaluru. Together, the four tier-1 metro cities, Delhi, Mumbai, Bangalore, and Hyderabad, source 20% of all investment in cryptocurrency in India.
Challenges and concerns
There are a growing number of cases of fraudulent cryptocurrency investment schemes that many have fallen prey to, and losses from such schemes have risen over the years.
Additionally, cryptocurrencies, due to their ability to be exchanged while evading the eye of authorities, are being considered as a means of money laundering and terror financing.
Cryptocurrency miners, if we take an example of Bitcoin miners, work to ensure that a block of Bitcoin is not used for more than one transaction and get a fee in the form of Bitcoin they are 'mining.' However, this fee has been declining.
This lowers the incentive for miners and can lead to fewer miners, which can lead to a lack of maintenance and audit of the system, which can have long-term repercussions on the block. Going by the graphs above, there will be a 0.78 BTC earning from Bitcoin mining in 2032, and 0.19 BTC in 2040.
领英推荐
Conclusion
Regardless of these threats, potential challenges, bans in most jurisdictions worldwide, and high price volatility, cryptocurrencies are here to stay as a sought-after investment vehicle by investors-retail and institutional.
References: