Understanding The Cryptocurrency Market

Executive Summary

7 min readJun 28, 2021

Cryptocurrency markets are decentralised, which means they are not issued or backed by a central authority such as a government. Instead, they run across a network of computers. Unlike traditional currencies, cryptocurrencies exist only as a shared digital record of ownership, stored on a blockchain.

Cryptocurrency Market Size and Technology

The cryptocurrency market cap has been projected to reach as high as $1–2 trillion in 2018 and it beat it which arose the anger of the government but the fact is CRYPTO is not a baby anymore, it still dominates over 1.8Trillion MC despite the ban and over 80% bear.
The market cap of Bitcoin exceeded $70 billion, with peak trading volumes around $3 billion per day.
Technology consulting firm CB Insights has identified 27 ways blockchain can fundamentally change processes as diverse as banking, cybersecurity, voting, and academics.
Schools are starting to see the future of Blockchain system e.g School in Kano,Nigeria will be accepting crypto despite the ban of crypto in Nigeria.
The World Economic Forum estimates that by 2027, 10% of global GDP will be stored on blockchain technology.
Most mining pools are located in China, comprising more than 70% of total Bitcoin mining. China manufactures most cryptocurrency mining equipment and leverages the country’s cheap electricity prices. The Chinese government had to place a ban on cryptocurrency and mining of Proof of Work cryptocurrency. The fact is bitcoin has grown so strong that these will only make it stronger cos more countries are now enhancing more powerful power source to mine bitcoin efficiently. Do you think mining currency with such power is suitable for the future of Nations?
There are over 1,000 cryptocurrencies in existence right now (called “altcoins”); over 600 have market capitalizations of over $100,000.

While Bitcoin’s price has generally been following upward trend, in early 2018, Bitcoin’s price fell sharply, dipping below $8,000 and still hovering around $22,000 in 2021 as news of tougher regulation from countires like China and South Korea surfaced.
Initial coin offerings are trending right now. This year, former Mozilla CEO Brendan Eich raised $35 million from an ICO in less than 30 seconds, and Bancor Protocol raised $153 million in under three hours.
Blockchain-related projects have raised more than $1.6 billion via ICOs to date, while venture capitalists have provided only $550 million for cryptocurrency companies.

Introduction

DriipCoin, bitcoin, blockchain, initial coin offerings, exchanges.No doubts, cryptocurrencies have caused quite the uproar in the media, online forums, and perhaps even in your dinnertime conversations. Despite the buzz, the meanings of these terms still elude many people’s comprehension. Perhaps we could put it as simply as Stephen Colbert does below, but we’ll be a tad more precise.

The technology underlying cryptocurrencies has been said to have powerful applications in various sectors ranging from healthcare to media.

With that said, cryptocurrencies remain controversial. While critics including economist Paul Krugman and Warren Buffet have called Bitcoin “evil” and a “mirage,” others, such as venture capitalist Marc Andreessen, tout them as “the next internet.” For every person declaring that cryptocurrencies are in a bubble, there’s another insisting that they are the next wave of the democratization of finance. At their simplest, they are merely the newest fintech fad; yet at the most complex level, they’re a revolutionary technology challenging the political, economic, and social underpinnings of society.

This article will attempt to demystify cryptocurrencies’ appeal, its complex underlying technology, and why a purely digital currency is able to have value. It will also examine the outstanding issues surrounding the space, including their evolving accounting and regulatory treatment.

What Is a Cryptocurrency and Why Use It?

Cryptocurrencies are digital assets that use cryptography, an encryption technique, for security. Cryptocurrencies are primarily used to buy and sell goods and services, though some newer cryptocurrencies also function to provide a set of rules or obligations for its holders — something we will discuss later. They possess no intrinsic value in that they are not redeemable for another commodity, such as gold. Unlike traditional currency, they are not issued by a central authority and are not considered legal tender, though some countries are working on making it legal tender.

At this point, use of cryptocurrencies is largely limited to “early adopters.” For scale, there are around 10 million Bitcoin holders worldwide, with around half holding Bitcoin purely for investment purposes. Objectively, cryptocurrencies are not necessary because government-backed currencies function adequately, What is Cryptocurrency built for? to serve as a currency, right.

So should a currency be limited to early adopters? DriipCoin estimation is limited in mining but efficient enough to circulate and be used by each human on earth.

For most adopters, the advantages of cryptocurrencies are theoretical. Therefore, mainstream adoption will only come when there is a significant tangible benefit of using a cryptocurrency. So what are the advantages to using them?

Pseudonymity (Near Anonymity)

Buying goods and services with cryptocurrencies takes place online and does not require disclosure of identities. However, a common misconception about cryptocurrencies is that they guarantee completely anonymous transactions. What they actually offer is pseudonymity, which is a near-anonymous state. They allow consumers to complete purchases without providing personal information to merchants. However, from a law enforcement perspective, a transaction can be traced back to a person or entity. Still, amid rising concerns of identity theft and privacy, cryptocurrencies can offer advantages to users.

Peer-to-Peer Purchasing

One of the biggest benefits of cryptocurrencies is that they do not involve financial institution intermediaries. For merchants, the lack of a “middleman” lowers transaction costs. For consumers, there’s a tremendous advantage if the financial system is hacked or if the user does not trust the traditional system. For comparison’s sake, if a bank’s database were hacked or damaged, the bank would be completely reliant on its backups to restore any missing information. With cryptocurrencies, even if a portion were compromised, the remaining portions would continue to be able to confirm transactions.

Programmable, “Smart” Capabilities

Certain cryptocurrencies can confer other benefits to their holders, including limited ownership and voting rights. For example, a cryptocurrency-funded organization can include voting rights in the currency’s software code. Cryptocurrencies could also include fractional ownership interests in physical assets such as art or real estate.

Cryptocurrency Technology

Much of the cryptocurrencies’ popularity and security advantages are derived from its ground-breaking technological innovation.

Blockchain Technology Explained

Blockchain technology underlies Driipcoin and many other cryptocurrencies. It relies on a public, continuously updating ledger to record all transactions that take place. Blockchain is ground-breaking because it allows transactions to be processed without a central authority — such as a bank, the government, or a payments company. The buyer and seller interact directly with each other, removing the need for verification by a trusted third-party intermediary. It thus cuts out costly middlemen and allows businesses and services to be decentralized.

Another distinguishing feature of blockchain technology is its accessibility for involved parties. It’s akin to Google Docs, where multiple parties can access the ledger at once, in real time. Today, if you write a friend a check, you and your friend balance your respective checkbooks when it’s deposited. But things start to go awry if your friend forgets to update their checkbook ledger, or if you don’t have enough in your bank account to cover the check (which the bank has no way of knowing beforehand).

With blockchain, you and your friend would view the same ledger of transactions. The ledger is not controlled by either of you, but it operates on consensus, so both of you need to approve and verify the transaction for it to be added to the chain. The chain is also secured with cryptography, and significantly, no one can change the chain after the fact.

Initial Coin Offerings

Initial coin offerings (ICOs) are the hot new phenomenon in the cryptocurrency investing space. ICOs help firms raise cash for the development of new blockchain and cryptocurrency technologies. Instead of issuing shares of ownership, they offer digital tokens, or “coins.” Investors gain early access to the technology, and are able to use it however they see fit. Startups are able to raise money without diluting from private investors or venture capitalists. Bankers are increasingly abandoning their lucrative positions for their slice of the ICO pie.