The Popularity of Cryptocurrencies – A Deep Dive.
“The popularity that cryptocurrencies have gained in such a short period of time is beyond comprehension and its popularity is backed by solid factors that are still deriving it’s fame. It is being perceived more as an asset class rather than a technological innovation and most of its popularity is derived by the retail investors who are eyeing parabolic returns in a short period of time.”
To find a person who has not heard the name cryptocurrency in today’s world is almost impossible and this immense popularity of cryptocurrencies is not just a fluke and solid facts back its fame. To deeply understand the reasons behind its popularity, we must deep dive into its basics and we are going to go deep enough.
What are Cryptocurrencies?
This is a question that is on everyone’s mind right now because the world of cryptocurrencies seems extremely complex for the new acquaintances to this innovation masterpiece. Cryptocurrencies are the digital currencies that are capable of executing direct payments between two individuals at peer to peer level without any control or interference from a central authority. This makes cryptocurrencies decentralized in nature and is the very reason they were created, to decentralize the financial system. The cryptocurrency transactions over the blockchain network are executed using the principle of asymmetric cryptography, thus the transactions cannot be faked or muted or interfered with making it highly secured and hence derived the name “Crypto-Currency”.
Reasons for its Popularity
There are several reasons for the popularity of the cryptocurrencies and thus we must understand them one at a time:
The decentralized nature of the cryptocurrencies is what makes them so popular. The people consider their money safe where there is no control or interference from a third party or a controlling body as there is in the centralized financial systems adopted by every country. It thus provides a sense of financial freedom to the users.
The cryptocurrencies have the capability of transferring the payments at a very rapid pace (within seconds) to any part of the world without the hassle of creating a bank account with a central authority. Payments can be made quickly peer to peer through personal wallets that can be stored even on a mobile phone.
Extremely Low Fees
Due to the decentralized form of transactions, the cost per transaction is reduced considerably and even the cross border transactions can be achieved within seconds and at very low fees. This low fees and real time cross border transaction capability has increased its popularity to a large extent.
Asset Class in Itself
The cryptocurrency and its tokens have become an asset class in itself that is becoming one of the most important reasons for its popularity. The crypto industry has grown to become a massive $2 Trillion industry today and it has just begun. Experts believe that a $100 Trillion crypto industry is inevitable.
The biggest reason for its immense popularity is the huge returns that the investors have reaped over the years using this asset class. Most of the investors in cryptocurrency are unaware of the technology behind them and only consider them as an asset class to invest in, that provides parabolic returns in a very short term. Huge gains over a short period of time publicized cryptocurrencies to be where they are at the moment and the scope of growth is still immense and beyond comprehension.
Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investmenting.
Photo by – Executium on unsplash