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Digital currencies are available in electronic or digital form and can only be transacted using electronic wallets or computers connected to the designated networks or Internet. Digital currencies have essential properties or features that allow for instant transactions that help execute and make payments across borders when connected to supported networks or devices. Cryptocurrency or digital currency is derived from encryption techniques used to enhance a network’s security. Here are some of the cryptocurrencies available today: Bitcoin, Dogecoin, Binance Coin, Ethereum, Litecoin, and Ripple.
A Brief History of Digital Coin and Cryptocurrency Market
The digital coin market dates back to the early 1980s when David Chaum, an American cryptographer, invented a blinding algorithm that remains a significant component in the new web-based encryption. The algorithm allowed for unalterable and secure exchange of information between parties laying the foundation for future electronic or digital currency transfers. Approximately 15 years later, Wei Dai, an accomplished software engineer, published a white paper on a virtual currency called the b-money that included most of the essential elements of modern cryptocurrencies.
The first widely regarded modern digital currency or cryptocurrency was Bitcoin. This was the first publicly used means of exchange that combined user anonymity, decentralized control, and record-keeping through a built-in scarcity and blockchain. It was first initiated in 2008 by the release of a white paper by Satoshi Nakamoto, presumably a pseudonymous person or group. The white paper explained the foundations of Bitcoin and blockchain. In early 2009, Nakamoto released the Bitcoin to people in public, and a group of supporters began mining and exchanging the currency.
The potential risk of the digital currency market
- High volatility
Digital currency or digital coins are prone to large swings in market value. An individual can lose or gain thousands of dollars over a day or short period. The individual value currencies and numbers fluctuate, making the digital coin market highly volatile. This means transacting or trading with digital coins is risky, and you could stand to lose or gain at market value at any time.
- Numerous currencies to navigate
The current popularity of digital currency and cryptocurrency has a downside. This is due to so many digital currencies being developed across distinct blockchains that all have limitations. Digital currencies are also risky and take time for an individual to determine which digital currency might be appropriate in a particular case or situation.
The future of the digital coin market
The digital coin market is becoming a more accessible digital and financial system in both the public and private sectors. Both the private and public sectors have recognized and have continued to embrace digital coins or currency in their financial systems. Technology-focused corporations, institutional investors, and even national financial institutions have begun incorporating digital currency in their operations. The market is keen to develop new regulations and policies to create regularized financial practices for the future. The digital coin market is also developing advanced innovative technology and techniques that lead to a more robust and better cryptocurrency financial system in the future.