HAS CRYPTO REALLY EVOLVED IN 2022?

Cryptocurrency is a digital currency that uses cryptography to secure transactions.

They are generally decentralized and are based on a blockchain protocol, which enables smart contracts to be carried out. It uses a payment system that allows payment/transactions to be carried but seamlessly on the network.

Cryptocurrency uses encryption to verify transactions made on the network; this means that an advanced form of coding is required to store and transmit data between wallets and into public ledgers.

Because cryptocurrency is secured by cryptography, it is impossible to fake transactions, or Crypto uses decentralized networks based on a distributed ledger that works with blockchain technology.

HISTORY OF CRYPTO

The history of crypto can be dated back to the ’90s when an American cryptographer - David Chaum, published a paper announcing an early form of anonymous cryptographic electronic money. The idea was that currencies would be transacted electronically and untraceable in a way that centralized organizations like banks are not involved.

A few years later, a proto-cryptocurrency known as Digicash was developed based on his early ideas. This currency required user software to withdraw funds from banks and special encryption before funds could be moved to the recipients.

In 1998 Nick Szabo designed what seemed to be a direct precursor to bitcoin, known as Bit Gold, participants were required to dedicate computer power to solving cryptographic puzzles, and those who succeeded in solving their puzzles were rewarded.

These previous cryptocurrencies could not solve the problems and limitations of fake transactions and double spending (digital data copy and paste) without using a central authority. Therefore, history was set about a decade later when Satoshi Nakamoto set the history of bitcoin and other cryptocurrencies in motion by publishing a white paper named “Bitcoin – A peer-to-peer electronic cash system.

In 2009, bitcoin was created with a proof of work consensus mechanism. It uses the cryptographic hash function SHA – 256. Bitcoin and other cryptocurrencies are based on blockchain technology, which creates immutable data structures and transactions. When the first block of bitcoin was created, about 50 bitcoins were mined. This first block is now generally referred to as the genesis block. Bitcoin literally had no value at the time and the few months after it came into existence. In April 2010, the market cap of BTC was about 13 cents; in November the same year, it surged to around 29 cents.

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RELEVANT CHANGES TO CRYPTO OVER THE YEAR

In 2010, BTC was the only cryptocurrency in the market; the price started at 14 cents. However, over the next years, new currencies have been developed and pushed into the market, and their prices have risen and fallen along with that of BTC.

Before 2017, it was a period of high volatility, and a good number of people lost confidence in crypto and began to lose interest in seeing it as an investment opportunity. But late in 2017, crypto saw unprecedented growth. The market cap for cryptocurrencies reached $820 billion and crashed in January 2018.

The 2017 bull market can be classified as a financial bubble because most investors were buying simply for fear of missing out (FOMO). The bull market of 2017 was a result of many investors being attracted to bitcoin scarcity and the fact that it was outstanding in the global financing system; hence the law of supply came into play which states that the higher price, the number of goods to be supplied and vice versa the lower the goods, the lower the number of goods to be supplied. This rise was however temporal as the bitcoin price rose to about 20 folds which amounted to almost US$20,000, only to fall back to a low of US$3,000 about a year later.

In 2020 bitcoin attained a remarkable rise despite the many factors that could make investors reluctant. It rose from a low of US$4,748 in March 2020 to almost US$30,000 by the end of the year despite the pandemic that ravaged the year. Unlike the 2017 bull market, which was invested mainly by opportunistic individual crypto, the 2020 market was mostly invested by large-scale institutions and governmental bodies such as university endowment funds, pension schemes, and most investment trusts. ?Well-known investors such as Paul Tudor James have invested heavily in the bitcoin project. In most settings, cryptocurrencies have also been accepted as a form of payment, and most vendors have digital wallets through which they accept crypto payments.

The emergence of financial products like bitcoin futures and blockchain-related funds has helped investors who are scared of crypto volatility to get involved in investing in the project because they can speculate on the falling prices by going short on the cryptocurrency.

In the summer of 2022, the crypto market crashed along the world financial market. The global market cap has fallen from $1trillion to about $860 billion. The global market inflation, the terra-Luna crash, and war situation like that of Ukraine and Russia have contributed to this unfortunate crypto market crash. Certain countries, such as India, have not passed the crypto bill. They also plan to ban private crypto trading and usage in the country.

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