Cryptocurrency is a form of currency similar to any currency we use in our
daily lives. However, it is entirely digital having no physical form. This
currency has a mutable value and can be used in stores, online payments
or wherever the currency is accepted. Now, for example, I want to buy a
car and I have insufficient money, however I do have 4 Ethereums. Now I
visit the car dealer and pay him the cryptocurrency through a third-party
exchange. To store the information of this transaction, an advanced
technology known as blockchain is used. This technology is imperative
because it stores all the information of an account and ensures the
balance and transactions are not tampered with.
Why do the prices of cryptocurrency rise and fall?
The rise and fall in the prices usually occur because of supply and
demand, here supply is the number of currencies available and demand is
how many people wish to buy the currency. For example, the price of a
bitcoin is very high and most of the holders want to sell the currency for a
greater price than they bought it for. Since, here the supply is more than
that of the demand, the price will need to decrease to balance the supply
and the demand. Thus, government can play a very pernicious role here.
The banning of cryptocurrency in major countries can leave the
currencies in scrambles.
Mining and why it is bad for the environment
In simple words, mining cryptocurrencies is nothing but generating new
currencies by solving certain computational puzzles and equations.
Mining maintains the records of the transactions and is vital for
cryptocurrency since it perpetuates the blockchain technology. In turn, a
miner is rewarded in the form of cryptocurrencies. If a person can not
afford a bitcoin, they can consider mining. However, to mine, you require
tremendous amounts of energy, approximately 72 terawatts of energy to
mine one bitcoin, which could leave adverse impacts on the environment.
A Cambridge study suggests that cryptocurrency mining is a top 30 energy
consumer, if it were a country. Moreover, studies claim that Bitcoin
stands a significant chance to single-handedly drive global warming,
producing enough carbon-dioxide emissions to push the global
temperature "above 2°C within less than three decades." Elon Musk was
crestfallen with the rapid increase in the use of fossil fuels for Bitcoin
mining and transactions, especially coal, which has the worst emission of
fuels. Elon Musk decided not to accept bitcoin as a mode of payment for
his Tesla cars. Every transaction executed; a small amount of energy is
consumed by a computer. To switch from a non-renewable energy
provider to a renewable energy provider is not an easy task and won’t be
Why Cryptocurrency will fail
Cryptocurrency can be considered a rebel organization inclined to
overthrow the government’s control over the economy. Cryptocurrency
tends to replace the fiat currencies (Currencies issued by the
government) and desires to be the standard currency used by everyone.
Cryptocurrency’s have the potential to destabilize or undermine the
authority of the central banks (RBI in India) Bitcoin claimed to be a
decentralized peer-to-peer payment network that is powered by its users
with no central authority or middlemen. This lack of central authority is
the primary reason governments are afraid of cryptocurrency. The
government are worried that cryptocurrency can be used to circumvent
capital controls, can be used for money laundering or illegal purchases,
and could be risky to investors. The government don’t have control over
cryptocurrency and they are timorous that they will form ties with
felonious firms and use their platform for illegal transactions. The
government fear they will lose absolute control over the economy.
Governments control fiat currencies. They use central banks to issue or
destroy money out of thin air, using what is known as monetary policy to
exert economic influence. They also dictate how fiat currencies can be
transferred, enabling them to track currency movement, dictate who
profits from that movement, collect taxes on it, and trace criminal
activity. All of this control is lost when non-government bodies create
their own currencies. This trepidation will force the government to ban
the trading of cryptocurrency without further ado. This action would be
inevitable and will cause the decline of cryptocurrency.
Should you take the gamble with cryptocurrency?
Absolutely not! Cryptocurrency has no physical embodiment and no
assets; it is a non-existent currency in the real word with no backup
support. The value of the cryptocurrency is erratic. For example, a
government ban on cryptocurrency by any affluent country can leave the
currency in crumbles. Bitcoin experienced catastrophe after the ban on
cryptocurrency by China. The entire platform of cryptocurrency is
dependent on Blockchain Technology, and this technology is vulnerable
to hacking and if hacked, all the capital invested might be seized. Hefty
growths entice people to invest and then take a risky burden. You can
either double your money or lose it all, which is a poor decision making.
Debt funds and Mutual funds are safer options, in times of financial
From a personal viewpoint, I do not see a future for cryptocurrency
simply because of the government’s power and authority. They will soon
realize that they are being overthrown by this rebel organization.
Philanthropist Elon Musk one of the most renowned entrepreneurs is
gradually withdrawing from this currency and millions will follow him.
Cryptocurrency may persevere in the next few years but will not be a