Over the past few years, cryptocurrency has received much buzz. Cryptocurrency is nothing but a virtual digital currency that is created, maintained, and secured using an encryption technique known as a cryptography for secure online transactions.
Cryptocurrency is like our traditional currency and can similarly be used to buy goods and services. The global online payment systems such as PayPal used to transfer traditional currency over the internet and cryptocurrency also have a similarity.
However, the difference between cryptocurrencies and our traditional fiat currencies is that the government authorities of the country issue the fiat currencies, are managed by a third-party vendor such as banks, and fiat currency can be used only in the country that issues it.
Whereas, cryptocurrencies are not controlled by any central authority and are managed by a network of computers worldwide that verify every transaction and it can be used anywhere in the world without any dependency on third-party vendors such as banks. The advantage of digital currency is also that it can be transferred conveniently across the borders without any currency exchange fee.
Cryptography uses the technique of a decentralized system that is based on blockchain technology. Blockchain consists of a chain of blocks, i.e., the digital pieces of information, i.e., transactions (blocks) that are stored on the distributed peers in the network (chain).
Blockchain technology makes it possible to have direct and transparent interaction between the two parties involved in the transaction.
Bitcoin is a peer-to-peer digital currency that was launched in the year 2009. It is the oldest and most popular among the cryptocurrencies and marks the beginning of its era.
When bitcoins started, their value was around $0.08, which now values for approximately $3,900 due to the exponential increase in its demand over the years.
Except for bitcoins, there are several thousand other cryptocurrencies. Some other popularly known cryptocurrencies are Litecoin, Peercoin, Namecoin, Cardano, Ethereum and many more.
The cryptocurrency market is becoming bigger every passing day. There are countries that are still not very sure of accepting the cryptocurrency because of the inevitable obstacles such as lack of any rules or regulations over its usage, threats it would carry along with it such as illegal transactions to trade drugs or weapons across the globe, unreadiness of the population in accepting the digitalization and scalability of the blockchain technology used in cryptocurrency.
While there are some countries like Venezuela, Tunisia, Sweden, Dubai, Japan, Estonia, and Senegal that have launched their government authorized digital currency. Marshall Island, a tiny Pacific island with a population of almost 60,000, is ready to adopt cryptocurrency as its official currency.
However, none of the world’s big economic powers had spoken much about getting cryptocurrency into practice until recently when officials from the People’s Bank of China gave the world a hint of adopting their cryptocurrency and bringing it into practice by the end of this year.
This would make China, the world’s first major economic country to launch its state-backed digital currency and hand it out to seven of the significant institutions in China to help the government distribute the new cryptocurrency into their country’s economy.
As per the sources, the state-backed cryptocurrency of China is all set to be in the market and will be launched on Singles Day, the biggest shopping day in China that’s on the 11th of November this year. They plan to distribute their cryptocurrency to approximately 1.3 billion Chinese citizens with the help of other institutions.
The central bank of China also has a plan to then distribute their cryptocurrency to the countries in the west by tying up with the banks. However, all this is not yet very clear.
The officials of the People’s Bank of China have also confirmed that the new cryptocurrency would be compliant with all the Chinese laws on fraud and money laundering.
China has decided to adopt the new currency to facilitate commercial transactions and enhance its efficiency. Also, China strategizes to have a more internationalized renminbi (Chinese currency) in the form of cryptocurrency to integrate more closely with the world.