Are you tired of feeling lost in the world of crypto? Well, we know everything there is to know and we’re here to share our expertise with you! Read this article and learn from the pros. With our insider knowledge and expert tips, you’ll be making profitable investments in no time. What will you find in “Crypto fundaments”?
- Learn about the fundamentals of the Cryptocurrencies
- Understand the working principle of Cryptocurrencies.
- Know about the future prospects of Cryptocurrency.
Introduction
Cryptocurrency is probably the biggest new trend in the domain of finance and technology. In a comparatively smaller duration of time, cryptocurrencies have successfully made their way into discussions on transforming financial infrastructures worldwide.
At the same time, the number of cryptocurrencies has been expanding continuously with each passing day.
Therefore, many people want to find more about cryptocurrency fundamentals and develop a solid understanding of cryptocurrencies. Since the introduction of the first-ever cryptocurrency, Bitcoin, in 2008, cryptocurrencies have been through a lot.
Initially, cryptocurrencies faced uncertainty and skepticism from all circles before gaining the hype. Now, they have also passed the disillusionment phase and are a common terminology in discussions about tech. Even if cryptocurrencies are in the initial stages as a technology category, they have matured gradually with better proof of utility.
As of now, the market capitalization of all cryptocurrencies combined together exceeds $850 Billion. On top of it, cryptocurrencies served as the foundation for trade of more than $1 billion worth of digital art and assets in the first quarter of 2022.
Furthermore, cryptocurrencies also drive decentralized trading and lending applications, which have almost $65 billion worth of assets locked in them. One could not miss the fact that the use of cryptocurrencies in file storage, cross-border payments, and community governance also presents favorable prospects for future of cryptocurrencies.
The growing maturity of the cryptocurrency domain would obviously invite interest from technology leaders, senior enterprise executives, entrepreneurs, and the general public. Therefore, a clear overview of cryptocurrency basics is an essential requirement for learning more about crypto technology and its potential.
This article serves as an insightful guide on the basics of cryptocurrency with different unique chapters. You can identify the technological foundation underlying cryptocurrencies, i.e., blockchain, and learn more about it. In addition, the article also reflects on the history of cryptocurrencies alongside a comprehensive overview of their work. The article also offers an outline of crypto jargon and the significance of crypto for the world. The final chapters of this article will cover the use cases of cryptocurrency and future prospects for crypto.
Chapter 1: Introduction to Cryptocurrency
The foremost highlight in any introduction to cryptocurrency would be the definition of cryptocurrencies. Cryptocurrency is basically digital currency that you can use for exchanging value online.
The primary foundation of cryptocurrency is blockchain technology. It provides the decentralization for which cryptocurrencies are quite popular today. Decentralization frees cryptocurrencies from the control of a central authority. As a result, cryptocurrency holders have improved control over their money and the freedom to use it as they please.
The Foundations of Cryptocurrencies
The first-ever cryptocurrency, Bitcoin, emerged as an electronic peer-to-peer cash system based on blockchain technology. The anonymous founder of Bitcoin, Satoshi Nakamoto, released a whitepaper on Bitcoin in 2008 followed by launching the cryptocurrency in 2009. So, how did the notion of a peer-to-peer virtual currency system gain momentum?
The value of cryptocurrencies depends largely on the cryptocurrency blockchain relationship. Blockchain delivers the trustless, secure, decentralized, and cryptographic traits in cryptocurrencies. It offers an immutable distributed ledger with a record of all transactions, thereby ensuring transparency and integrity of all transactions.
In simple words, blockchains ensure better tracking of financial activity with promising assurance of all participants acting in good faith. Driven by technological innovation, cryptocurrencies are popular for enabling people to carry out financial transactions on their own. Every crypto holder is basically their own bank.
Are Cryptocurrencies Popular?
So, cryptocurrency has a lot of features, and it changes financial conventions by huge margins. Does this imply a solid backing for the growth of cryptocurrencies? If you take a look at the numbers, there were only a few cryptocurrencies in the initial years following the launch of Bitcoins. In 2022, the number of cryptocurrencies exceeded well above 9,000, with many new cryptocurrencies and assets emerging every day.
Furthermore, people aspiring to learn cryptocurrency would also have some doubts about the legal status of cryptocurrencies. As a matter of fact, cryptocurrencies have been legally accepted in the United States.
On the other hand, the regulatory status of cryptocurrencies varies from country to country. Most important of all, you must note that there is no written law preventing you from transferring wealth through cryptocurrencies.
Thousands of computers spread all over the world drive blockchain networks without any single entity in control.
You could surely think of how cryptocurrencies can serve as the next big thing in evolution of finance. The most crucial aspect driving the functionalities of cryptocurrencies is blockchain technology.
With the power of blockchain technology, users can carry out financial transactions with cryptocurrencies in trustless environments. How is blockchain enabling the various attractive features of cryptocurrencies?
Let us dive into an overview of blockchain technology to understand what exactly fuels the expanding crypto ecosystem. Learn more from our course on Cryptocurrency fundamentals.
Chapter 2: Role of Blockchain Technology in Crypto
The next important aspect in any discussion on cryptocurrency fundamentals after the definition of cryptocurrencies is blockchain technology.
You know how blockchain is the technology behind cryptocurrencies from the previous chapter. Now, let us learn more about blockchain technology to identify how cryptocurrency and blockchain fit each other.
Blockchain is a decentralized distributed ledger technology that utilizes cryptographic mechanisms for adding immutable data in the ledgers.
In simple terms, you can think of the blockchain as a chain of blocks, where the blocks store information about transaction records. Among the many new technologies which emerged in the last decade, blockchain has been noticed for its role in driving revolutionary technological progress.
A clear overview of what blockchain is and how it works can help you learn cryptocurrency from a practical perspective.
Distributed Ledger Technology
One of the first things you should know to understand blockchain technology is that it is a type of DLT or distributed ledger technology. The distributed ledger technology itself is a secure ledger or system of transaction records, which utilizes consensus of synchronized and replicated data distributed throughout multiple instances.
You can think of the distributed ledger as a database present on different independent computers, referred to as nodes. No specific authority, person, or agency can take custody of data in a distributed ledger, thereby taking away central authorities.
Distributed ledger technologies or DLTs depend on nodes for determining network state and securing the network through consensus mechanisms.
Some of the other popular examples of distributed ledger technologies include Directed Acyclic Graph (DAG), Holochain, and Hashgraph. The cryptocurrency blockchain association depends on the primary idea behind blockchain as a distributed ledger technology.
Blockchain was one of the DLTs with an emphasis on recording transactions in linear, time-stamped blocks.
Blockchain and Cryptocurrency: How Do They Fit Together?
The most prominent question which must be revolving around your mind right now must be about how blockchain builds cryptocurrencies.
The term blockchain gives a lot away about its meaning in the terminology itself. Block and chain are the two distinct terms you can figure out in the word ‘blockchain.’ The block is an independent record of all transactions on a blockchain network, which is added to the blockchain after verification.
All new transactions on the blockchain network should follow the same process and are added to the next block.
Following the verification of a block, the block becomes a part of the linear chain of blocks. The blocks are linked with each other through a cryptographic hash function, starting from the first block to the recently completed block.
Blockchain as a DLT for Cryptocurrencies
Blockchain is a distributed ledger technology. It includes blocks of transaction records in a linear chain, and no one can change the blocks once they are added to the chain. Most important of all, the cryptocurrency blockchain association becomes clear with the facility of decentralization.
Multiple nodes serve as custodians of data for verification and securing transactions in the blocks.
Each node has a copy of the existing state of the blockchain, and there is no possible way to change transaction data in verified blocks. Therefore, you can be completely sure of security and transparency with the use of blockchain for cryptocurrencies.
The final and most important aspect of blockchain technology that is relevant for cryptocurrency basics is the consensus algorithm. Consensus algorithms serve as vital instruments for achieving the trustless environment in a network with multiple distributed nodes storing the same information. In addition, consensus algorithms are also critical requirements for addressing the problems of double-spending in crypto transactions and crypto stacking.
The two most popular consensus mechanisms right now are Proof of Work and P asroof of Stake algorithms. In addition, many other consensus mechanisms such practical Byzantine Fault Tolerance (pBFT), Delegated Proof of Stake (DPoS), Proof of History, and Proof of Importance have also evolved on different blockchain networks.
With such a formidable influence on cryptocurrency fundamentals, blockchain technology has also exhibited promising potential in many other sectors.
However, one would definitely wonder about the way in which blockchain technology pushed the growth of cryptocurrencies over these years. The next chapter dives into the history of cryptocurrencies to help you understand how they have evolved over the years.
Chapter 3: Evolution of Cryptocurrencies
If you want to learn cryptocurrency, there is no possible way you can think of leaving out the history of crypto. Many of you may have assumed that cryptocurrencies are a brand-new trend and might not have a history.
However, digital assets and the underlying technology have a history with some profound milestones. Obviously, the first milestone in the history of crypto draws attention towards the arrival of Bitcoin in 2008.
On the contrary, the concept of decentralized networks is considerably older than Bitcoin itself. Where did the idea for cryptocurrency and blockchain come from?
Origins of Blockchain
Since blockchain is one of the crucial requirements for developing cryptocurrencies, it is important to reflect on its history. The common perception about origins of blockchain relates directly to the foundation of Bitcoin.
Even today, many people think that the blockchain technology we know today has been inspired by the Bitcoin blockchain. As a matter of fact, the idea of blockchain existed way before the concept of Bitcoin and cryptocurrencies.
Cryptographer David Chaum proposed the concept of anonymous and cryptographic electronic money in 1983. He also created an application named Digicash, which was actually an initial version of crypto applications. The application facilitated the use of encrypted keys designated to users for transferring funds.
Apart from David Chaum, many of the early pioneers in the world of crypto and blockchain included Nick Szabo and the National Security Agency (NSA). However, the introduction of Bitcoin for the first time changes the narrative of an introduction to cryptocurrency in a different direction.
Evolution of Cryptocurrencies:
- 2009: Bitcoin is released
- 2011: Bitcoin’s value passes $1 threshold
- 2012: Litecoin was released which offered faster transaction
- 2013: Bitcoin’s value increase beyond $1000
- 2015: Ethereum was released
- 2016: Waves and Zcash were created
- 2017: Over 1000 cryptocurrencies are listed on exchange
- 2018: EOS was introduced
- 2019: 7 major crypto exchanges are hacked
- 2020-2022: Crypto lending, DeFi, CBDC start to gain popularity
Bitcoin Comes on the Scene
The year 2008 will always have its place in history for the massive financial crisis engulfing the whole world. During this time, Satoshi Nakamoto, an anonymous author, published a whitepaper on Bitcoin.
The whitepaper described Bitcoin as an electronic peer-to-peer cash system. The concept of Bitcoin outlined in the whitepaper lays the groundwork for many cryptocurrency basics you learn today.
Bitcoin offered a digital currency with the flexibility for transferring between peers without any intermediaries. The whitepaper also showed how Bitcoin used blockchain for creating an immutable and decentralized infrastructure. In addition, blockchain also provides an ideal solution for double-spending issues through time-stamping. Learn more from our course on Cryptocurrency fundamentals.
Second-Generation Networks
The world of cryptocurrency was not going to struggle with Bitcoin as the only alternative available for everyone. Many of the early projects in the crypto domain following the arrival of Bitcoin were primarily rip-offs and meme projects.
However, the second stage in the evolution of cryptocurrencies started after 2013 as developers shifted focus towards building serious projects.
One of the biggest players after Bitcoin in any introduction to cryptocurrency would be Ethereum. The founder of Ethereum, Vitalik Buterin, identified some profound limitations in Bitcoin, such as the inability to create other decentralized applications.
As a result, the world witnessed the rise of Ethereum. It evolved as the first blockchain network with desired capabilities for supporting smart contracts and facilitating their execution. Smart contracts are independent and self-executing pieces of code that do not require any interaction from developers or users. During 2020-2022, the cryptocurrency sector introduced decentralized finance or DeFi, various financial services on blockchain and even Central Bank Digital Currencies that are reshaping the financial industry around the globe.
A clear impression of the history of crypto definitely offers a comprehensive understanding of cryptocurrency blockchain interplay and how they complement each other.
However, the two most prominent mentions in the history of crypto as of now are Bitcoin and Ethereum. Are there no other cryptocurrencies? The following chapter offers you an overview of the different types of cryptocurrencies you can find now.
Chapter 4: Types of Cryptocurrencies
When you take a look at the existing crypto market, you can see a lot of hype around Bitcoin and Ethereum. However, any individual with fluent awareness of the crypto ecosystem would know a different.
As a matter of fact, the present crypto ecosystem has over 9000 different cryptocurrencies. Most of them serve the same objective of electronic peer-topeer cash transactions, while many others have evolved to offer some unique use cases and solutions.
Bitcoin is undoubtedly the first-ever cryptocurrency that gained massive levels of popularity in mainstream media.
However, there is more to the cryptocurrency fundamentals than just Bitcoin. If you want to develop a better understanding of different types of cryptocurrencies, you need to understand three important terms. Let us start without any delays.
Altcoin, Coin, and Token
An altcoin is one of the common terms you might come across while exploring cryptocurrency basics, and you don’t have to struggle to understand its meaning. As the name implies, it is some form of alternative coin. In simple terms, altcoins are basically any digital currency other than Bitcoin.
Even if altcoins might seem like the followers of Bitcoin, they account for almost half of the $2 trillion market cap of the cryptocurrency market.
While many altcoins are perceived as risky cryptocurrencies without any finished products or laid-out plans, some of them are well-established. For example, Ethereum is an altcoin with its own blockchain and the special functionalities of decentralized applications and smart contracts.
The two other terms which are significant entries in discussions on cryptocurrency blockchain examples are coin and token. Many beginners utilize the words token and coin in an interchangeable manner, assuming that they are similar.
However, coins and tokens are completely different variants of cryptocurrencies. A coin refers to the native cryptocurrency of a blockchain network hosted on the network itself. Bitcoin, Litecoin, and Ether are the best examples of coins in cryptocurrencies.
On the other hand, a token is different as it is a cryptocurrency hosted on different blockchain network. Generally, cryptocurrency tokens are standardized decentralized applications or dApps, which serve as a component of the expanding smart contract ecosystem.
Types of cryptocurrencies:
- Utility Tokens > Security Tokens > Payment Tokens
- Stablecoin > Non-fungible Tokens > Exchange Tokens
Some of the notable players in the smart contract ecosystem include Ethereum, Solana, Polkadot, and many others. Examples of popular tokens in the crypto space right now include UNI, AAVE, YFI, USDT, and others.
Stablecoins
The overview of different types of cryptocurrencies in a discussion on cryptocurrency fundamentals would never skip stablecoins. Stablecoins are the answer to one of the most prominent concerns associated with cryptocurrencies.
The value of cryptocurrencies depends on the perception of their utility, and changes in such perception can lead to fluctuation of cryptocurrency value. Therefore, stablecoins are a credible door to crypto adoption as they have the backing of cash or gold reserves along with value pegged at a one-to-one ratio with fiat currency.
The overview of different types of cryptocurrencies creates the ideal basis for moving towards the working of cryptocurrencies. How do cryptocurrencies use blockchain technology for facilitating transactions in practical applications?
Let us find out more in the next chapter, which deals with the working of cryptocurrencies.
Chapter 5: Working Principle of Cryptocurrencies
Many of you must have guessed the answer to this question from the first instance. Blockchain helps in driving the world of cryptocurrency, and we have covered the basics of blockchain and how it fits with crypto in a previous chapter. Now, it is important to understand the working of cryptocurrency by taking blockchain into consideration.
Blockchain offers the digital ledger for a cryptocurrency, and a copy of the ledger is available on all computers or nodes in the network. Any particular system does not have control over the ledger.
The overview of cryptocurrency basics clearly emphasized how blockchain can drive better transparency and trust while strengthening crypto data security. However, it is also important to dive deeper and reflect on the broader implications that blockchain brings for cryptocurrencies.
What Makes a Cryptocurrency Attractive?
The advantages of blockchain technology are a common highlight for all cryptocurrencies. Therefore, the differentiating aspect of all cryptocurrencies is the uniqueness of the underlying blockchain network.
Better the blockchain network, the more popular the cryptocurrency will be. So, what encourages people to invest their time, efforts, and resources in cryptocurrencies? The assurance of a trustless environment through consensus and transparency of all transactions on the network offers you the best answer for the same.
How Do I Access Cryptocurrencies?
In order to use a specific cryptocurrency, you need a crypto wallet. Create your own crypto wallet, and you can purchase cryptocurrencies of your choice directly from the wallet or through an exchange.
Interestingly, one of the important highlights in cryptocurrency basics refers to the way in which people can access cryptocurrencies.
Crypto holders do not have to store their assets in conventional bank accounts. On the contrary, you get digital addresses with public and private keys for empowering crypto users to transfer funds.
The private keys help you in unlocking and sending cryptocurrencies, while the public keys serve as the receiving address. Public keys are available to almost anyone and could help the crypto holders in receiving cryptocurrency from a sender.
Types of Crypto Wallets:
- Hot Wallets:
- Desktop Wallets
- Web Wallets
- Mobile Wallets
- Cold Wallets:
- Paper Wallets
- Hardware Wallets
You can clearly witness how cryptocurrencies are attractive for the right reasons. In addition, you also discovered a brief overview of the simple and flexible approach to utilizing cryptocurrencies. All of these aspects build a deeper understanding of the cryptocurrency blockchain connection and the appeal of buying crypto.
However, it is also important to wonder about the possibilities for the adoption of cryptocurrencies on a large scale. Do people and institutions need cryptocurrencies? Find the answer to this question in the next chapter which reflects on the reasons for which the world needs cryptocurrencies.
Crypto wallet security:
- Use Cold Storage
- Keep your holdings private
- Keep Your Mobile Device Safe
- Stay alert for phishing scam
- Backup Your Wallets
- Don’t share your wallet information
Chapter 6: Significance of Crypto in the Modern World
Every new tool or technology crafted in human history has been associated with a specific purpose. The introduction to cryptocurrency shows how they are decentralized, secure, and anonymous with the assurance of trustless environments for financial transactions.
What purpose do they serve for the average person? Banks and digital financial tools for retail users already provide convenient and secure approaches for accessing financial services. So, why should the world switch to cryptocurrencies from banks and other financial institutions?
The diverse use cases of cryptocurrencies like Bitcoin and the value advantages of blockchain technology are obviously the first points one can find as reasons for the adoption of cryptocurrencies.
However, it is important to find out why the world needs cryptocurrencies when banks provide the desired utility and comfort for accessing financial services. The answer points out the ability of cryptocurrency to enable unbanked people to access financial services. Learn more from our course on Cryptocurrency fundamentals.
A Case for the Unbanked Population
The functionalities of cryptocurrencies have been making all the noise in developed countries. However, users in developed countries with stable financial and political landscapes do not have any special need for cryptocurrencies. Cryptocurrency fundamentals showcase that they eliminate the need for trust. On the contrary, there is no problem of trust with financial institutions and central governments in developed countries.
However, citizens from countries where people could not trust their banks or governments are in dire need of cryptocurrencies. For example, people in a country with a collapsing economy without any ability to purchase foreign fiat currencies can use cryptocurrencies.
Real-World Example of the Importance of Crypto
The example of Nigeria shows how cryptocurrencies like Bitcoin can replace banks in many practical use cases. According to reports, the crypto trading volume on a monthly basis in 2022 amounted to almost $92 billion.
Some of them have claimed that the shift to crypto was largely driven by the high commission rates charged by Nigerian banks for cash transfers.
In addition, the humongous inflation rate of 16% leads to the adoption of crypto as the banking system in Nigeria. Some of the crypto investors from Nigeria also suggested that Bitcoin served as the best alternative to avoid frozen bank accounts.
Chapter 7: Important Crypto Terms
The strong foundation for implementing cryptocurrencies in the real world definitely shows how important they are. However, any beginner might struggle in coming to terms with crypto jargon.
The detailed overview of cryptocurrency basics practically offers all the insights required for understanding various terms in the crypto landscape. On the other hand, you may come across many technical terms and slang in the literature pertaining to cryptocurrencies.
A comprehensive understanding of all crypto-related terms gives you the confidence to navigate the crypto space without any worries.
You need to take note of the significant ones in the beginning. Here are some notable crypto terms you should know before you dive into the practical applications or use cases of cryptocurrency. Check out our blockchain academy to better understand cryptocurrencies.
Address
Address is the string of characters and serves as the bank account of an individual where they can store, receive as well as send cryptocurrency. Each crypto address is unique.
Decentralized Apps
Decentralized Apps or dApps are another important highlight in crypto jargon in any introduction to cryptocurrency. They are a practical application of blockchain or cryptocurrency, generally featuring
DeFi
DeFi is the acronym for Decentralized Finance, a massive movement that has been gaining momentum in the crypto space recently.
The DeFi movement focuses not only on trading decentralized cryptocurrencies but also on ensuring that it happens in a decentralized manner. As of now, some of the popular DeFi projects include decentralized exchange protocols and lending platforms.
Fork
Fork is another important term in crypto jargon you must know for understanding the cryptocurrency blockchain interplay better. The fork is basically a situation in which a blockchain-based network or cryptocurrency divides into two distinct projects with their unique set of governing principles and code.
Gas
Many of you may confuse Gas for the fuel you need to run your cars. In the crypto space, Gas is the cost of computing resources required for completing transactions on the Ethereum blockchain. Users have to pay a specific Gas fee for validating their transaction on Ethereum.
Halving
Halving is also one of the significant entries in crypto jargon as it defines a major evolutionary trait of Bitcoin. It is basically the process of reducing the rewards for mining Bitcoin by half after successful mining of 210,000 blocks. Halving ensures restrictions on exponential increase in the circulating supply of Bitcoin.
Hash Rate
Hash Rate is a critical element in crypto jargon, especially for its role in cryptocurrency fundamentals. The hash rate is basically an estimate of the processing power and computing resources required for crypto mining.
HODL
HODL is a slang you would come across frequently in the crypto landscape for various reasons. The basic idea underlying HODL is that investors should hold on to their crypto assets even in the event of a dip in prices. In simple terms, HODL implies the belief and loyalty of users in a specific cryptocurrency.
ICO
Initial Coin Offering or ICO is the method blockchain projects follow for raising money and launching their different virtual currency networks. ICOs became quite a popular term in the crypto space in 2017 and 2018 with the hyped frenzy around cryptocurrencies.
Mining
Mining is an unavoidable term in cryptocurrency basics as it is the process of creating new cryptocurrencies. Miners receive rewards for validating transactions and securing a network in the form of new tokens.
NFT
Non-fungible tokens or NFTs also qualify as a prominent mention in crypto jargon for the unparalleled levels of attention they have been receiving recently. NFT is a new type of digital asset which allocates ownership of virtual assets such as a digital collectible or virtual artwork.
Wallet
Another significant term in crypto jargon is a wallet. The cryptocurrency wallet is basically similar to a physical wallet which stores the keys to your cryptocurrencies on a blockchain network.
Chapter 8: Cryptocurrency Use Cases
An overview of the cryptocurrency fundamentals starting from its definition to the outline of crypto jargon, clearly establishes how it promises technology innovation. It can provide secure and open access to financial services while empowering users to become their own banks.
However, it is also important to wonder how cryptocurrencies can find applications in the real world. You need to take a look at the following cryptocurrency use cases to identify how they are valuable to the world.
Universal Access to Banking
Almost 2 billion people in the world cannot access banking services due to various issues. Unstable governments, civil wars, hyperinflation, and fraudulent banking institutions offer a solid foundation for one of the first use cases of cryptocurrencies right now.
As discussed in a previous chapter, people in Nigeria have adopted Bitcoin as a financial infrastructure rather than trusting the banks.
Digital multisignature wallets can help in transferring cryptocurrencies without relying on traditional banks. As a result, people who don’t have a bank account could easily access banking services alongside creating a store of value with cryptocurrencies.
Decentralized Applications and Smart Contracts
The overview of cryptocurrency basics generally refers to financial applications. However, Ethereum changed the narrative about use cases of cryptocurrencies by introducing decentralized applications and smart contracts.
In addition, Ethereum also introduced the ERC-20 standard for better classification of tokens in the crypto landscape. ERC20 standard tokens and smart contracts serve as the basis for many blockchain-based assets like utility tokens.
The utility tokens can offer privileges to users for accessing dApps or selected services in crypto ecosystems. For example, you can access services in online games such as CryptoKitties with ERC20 standard tokens.
In addition, you can also find examples of crypto loans among the cryptocurrency use cases, which help a company in transferring shares to investors.
Asset-backed Tokens
Another promising area of applications of cryptocurrencies is evident in the case of asset-backed tokens. When compared to utility tokens, asset-backed tokens offer intrinsic value associated directly with a physical asset. Tokenization of assets provides better prospects for liquidity pools of real-world assets.
Connecting with IoT
The most promising highlights for the crypto sector in recent times have been drawing attention towards the possible inclusion of IoT technologies. IOTA is the best example to showcase how cryptocurrencies can serve the foundation of an environment where machines can trade resources and services with each other.
IOTA has successfully entered into a collaboration with a leading car manufacturer for testing a smart crypto wallet technology.
Drivers could use the smart wallet technology for earning credits to pay for road tolls, parking fees, or smart charging. Drivers can earn the credits by enabling dat reporting functionalities in the vehicles for informing authorities about road conditions.
One could clearly notice that cryptocurrency use cases exceed well beyond the scope of digital currencies alone. The incorporation of smart contracts and distributed computing abilities in cryptocurrencies can expand the list of real-world applications of cryptocurrencies in the future.
Where are cryptocurrencies headed from here? Let us discover the answer in the concluding chapter of this article which reflects on the future of cryptocurrencies.
Cryptocurrency Use Cases:
- Universal Access to Banking
- Connecting with IoT
- Decentralized Applications and Smart Contracts
- Asset-backed Tokens
Chapter 9: Future of the Crypto Ecosystem
Cryptocurrencies have come a long way from the whitepaper by Satoshi Nakamoto in 2008 to a massive thriving ecosystem. With more than 9000 cryptocurrencies circulating worldwide, they have truly revolutionized many conventional perspectives on finance, investments, transactions, and the stock market.
The massive hype around cryptocurrencies definitely leads to some well-founded concerns regarding the future of crypto compliance. However, a clear overview of the future prospects for cryptocurrencies can resolve such uncertainties with ease.
If you want to find out more about the future of cryptocurrency blockchain applications, then you must understand how they are faring now.
Some industry statistics might help you perceive a detailed impression of the potential of cryptocurrencies for future growth.
- First of all, there is no way one can ignore the massive market capitalization of the cryptocurrency sector. The overall market capitalization of the global crypto market is $846 Billion as of December 2022.
- Another important highlight in crypto statistics that shows favorable promises for its future refers to the daily trading volume. On average, the daily trading volume for crypto rounds up to $120 billion.
- As of now, more than 32% of small businesses in the US accept crypto as a valid form of payment. On top of it, around 27% of Americans have expressed their support for adopting Bitcoin as legal tender.
- You should also note that the number of transactions on Ethereum scaled close to 1 million transactions on a daily basis.
- Furthermore, statistics also indicate that the worldwide ownership rate of cryptocurrency stands presently at 3.9%. So, you have roughly over 300 million crypto users all over the world right now. In addition, crypto users also have the support of over 200 different cryptocurrency exchanges for active trading.
All these numbers paint a favorable picture of the cryptocurrency landscape. On the other hand, the statistics also present viable hints at expanding the ways in which crypto can become more relevant in the future. Within just a decade, there are over 300 million people using crypto.
In addition, cryptocurrency and blockchain have served as critical factors for fueling the rise of new trends like NFTs and DeFi.
The basic principles of decentralization, immutability, transparency and accessibility would drive many other promising applications of cryptocurrencies in the future. Learn more from our course on Cryptocurrency fundamentals.
The incorporation of smart contracts and dApps in the crypto ecosystem also presents many plausible opportunities for the future of crypto. Start exploring more about cryptocurrencies right now and identify their true potential. Check out our blockchain academy to better understand cryptocurrencies.
