The Future of Cryptocurrency
Cryptocurrencies have taken the world by storm, becoming more popular on the internet. More traders, investors, and consumers are jumping onto the bandwagon, as the rise in the value of crypto, specifically digital currencies like bitcoins, has been nothing short of astonishing. Unfortunately, these relentless buyers have also attracted the sharks.
One of the problems that many people have is the perception problem. Just because a new currency or asset is in the news almost daily doesn't mean that it is secure or even healthy for the investor. Many times the news stories are either wholly misconstrued or fabricated entirely. But then again, when the past couple of bubbles burst, the entire financial system almost crumbled, and many people lost their life savings.
Now that we have the perception problem out of the way, we can look at the bright future of cryptocurrencies. While there are no guarantees for the future, the most optimistic outlook is for more stable currencies and less corporate control over the infrastructure. The biggest problem right now is price volatility, and this is where most traders are losing their shirts.
Since the price of bitcoins reached all-time highs in November, traders have scrambled to pick up any investment that they could find. Some have even managed to get into the business. Now, this is a risky business in and of itself. The problem is that the very foundation of the modern financial system is based on the use of one specific transaction network. If a company wanted to move from the current payment system to the bitcoin protocol, they would need to obtain appropriate licensing or permission from the central bank.
However, the problem is that the price of bitcoin has recently dropped below the price of a standard diamond. While this makes the currency's price irrelevant for the typical investor, the implications are much more significant. The importance is that if the cost of the protocol drops below the price of the average diamond, then the cost will effectively reduce the power of the decentralized ledger known as the bitcoin ledger. Because the ledger is only accessible by people who have the correct login information and controls, this means that it is currently under the supervision of a group of central government bankers rather than the ordinary consumer.
Because of the recent drop in the price of bitcoins, the future of the decentralized ledger known as the bitcoin protocol is in doubt. At the moment, the number of users controlling the ledger is limited to less than three hundred. The problem is that the amount of digital gold that bitcoin can create with the bitcoin protocol is limited to the amount that can be "mined" through computing power. In effect, there is a limited amount of money that bitcoin can create through running computers, which means that as long as computers are running the bitcoin protocol, the currency's value will be in danger of being reduced.
Due to the recent increase in the price of bitcoin and the problems caused by China, several altcoins have been launched to combat the perceived loss of value of the bitcoin protocol. One such project is dogecoin. Dogecoin started to rise in cost in early 2021 when the bitcoin price was rising, which brought about speculation.
Although dogecoin was meant to attack the perceived devaluation of the bitcoin ledger, the designers of the altcoin realized that they needed to provide an alternative way to access the ledger if it was going to be effective. Dogecoin allows users to access the database of the bitcoin ledger using a virtual "Wallet". Unlike the centralized ledger system of the traditional cryptocurrency, the dogecoin ledger is not controlled by a single centralized authority. Since there are several independent virtual ledgers, each with its own sets of software logs, each virtual ledger is safe from the effects of Dogecoin deflation. As more users of the decentralized model become aware of its benefits, the value of the ledger will rise and will likely exceed the monetary worth of the virtual currency.