Cryptocurrency: Current Market
Cryptocurrency in current market is a digital payment system which is a peer-to-peer system. It can enable anyone anywhere to send and receive payments without relying on banks to verify transactions. These payments exist purely as digital entries to an online database that describe specific transactions; unlike physical money. Bitcoin was the first cryptocurrency that was developed in principle by Satoshi Nakamoto in a 2008 paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.” Which was described as “an electronic payment system which is based on cryptographic authentication instead of trust. That cryptographic authentication comes in the form of transactions. That are verified and recorded in a form of a program called a blockchain. Blockchain is open distribute ledger. It record transaction in code. Also called as a checkbook and distributed across the world.
The digital revolution of money is paving its way to success. Twelve years after the inception of Bitcoin, the number and popularity of cryptocurrencies have grown exponentially. There are more than 4000 cryptocurrencies listed world wide. Moreover, companies and central banks have adopted their own digital currency, and market adoption is huge, leading to a radical departure from the traditional model of ‘monetary exchange’. Recently, the price of Bitcoin reached the record high of $58,354. The historic feat was achieved after many renowned companies announced that they would now accept Bitcoin as a mode of payment. The meteoric rise in the value of virtual currency has made it a hot topic among analysts and investors all over the world.
Current Market of Cryptocurrency
The digital world needs digital money hence digital currencies are the future of transactions. However, cryptocurrencies are still illegal in few countries including Nepal. Nepal Rastra Bank has classified all transactions related to cryptocurrencies as illegal under the foreign exchange law. Although, cryptocurrencies have no foreign central authority to regulate them. By design, cryptocurrencies are decentralized digital currencies that are traded from one individual to another without the intrusion of banks or other regulatory bodies.
The reason for such hesitation with the adoption of crypto in Nepal maybe because of its volatility. As it is still in the experimental phase or its possible negative impact on the economy. Cryptocurrencies are a construct of the private sector with no official oversight or regulation. Also open and exploited by criminals to scam unwary investors. They have unregulated and exposed to unscrupulous behavior. Also, since there are no central authority governing cryptocurrencies, no one can guarantee its minimum valuation. If a large group of merchants decides to “dump” their cryptocurrencies and leave the system. Then its valuation will decrease greatly which will immensely hurt users who have a large amount of wealth invested.
Summing up, However, distinct from the discussion on cryptocurrencies, there are a number of potential advantages in utilizing blockchain technology more broadly within the financial system of our country. Perhaps paradoxically given the current lack of regulations of cryptos, blockchain could be a powerful regulatory tool. Hence many countries have been trying to develop their own cryptocurrencies which can be monitored and regulated by the government. Which will be a positive step in moving towards a digital economy.