If you know about bitcoin, you should gather knowledge about blockchain technology because bitcoin is based on blockchain technology. While many consider both the same, but they are not. Bitcoin is a currency that runs on blockchain technology, which was invested as an architectural design for decentralized transactions. After social and mobile networking, trading software is the biggest computing program globally.
What is blockchain?
In a simple term, blockchain is used as an underlying process of bitcoin where blocks are added on each crypto transaction, and the process of adding blocks one after another is a work of a miner. All transaction records done with crypto are stored in a blockchain, known as a public ledger.
There are different types of blockchain modules available for a specific industry, such as blockchain 1.0 is dedicated to cryptography or crypto domain related to currencies. It can be used for transferring funds and online payment integration. Conversely, blockchain 2.0 is dedicated to stocks, loans, financial products, bonds, and smart properties. Here, properties and other assets can be added to a blockchain. Blockchain 3.0 is mainly working for the government, health, sciences, research, and cultural institutions.
So, now you have an idea about blockchain technology and know about the main model that runs the crypto ecosystem. Here, you can find some insights into the crypto domain:
- Crypto will replace fiat money – it is an abrupt idea that people think crypto will replace fiat currency in future because it is not possible as the internet is not available in remote places. People living in these places cannot use crypto for their daily transactions. Also, it is not mandatory to index crypto with fiat money. If bitcoin or BTC perform well, then the crypto market will perform at the same level.
- Balance sheet transformation – many organizations are considering bitcoin as their assets because they think that holding cash in their balance sheets can depreciate over time and convert their fiat money into bitcoin to gain more value. Earlier, businesses converted their cash into bonds and stocks, and now they are using bitcoin to convert their cash into assets. This action was tested by some big players like Tesla, Microsoft and Mass Mutual. But it has been proved that bitcoin mining can drag huge energy, and it can create a huge carbon footprint. So, investing in crypto is a good choice, but converting the balance sheets into crypto can be a bad idea.
- Non-fungible tokens – Well, non-fungible items assets are not evolved with bitcoin invention. There are several unique items like domains, copyrights, Twitter handles available, which are non-fungible items, and they are unique and not interchangeable.
- Altcoin transition – Defi emerged many altcoins in 2020, and it has performed well in the crypto market. But few of them have failed to deliver the best results, such as Tron, ZCash, Monero, Ethereum Classic, Bitcoin Forks, and Ripple. Even many altcoins have vanished from the market. So, it is like gambling, and you cannot trust an asset that can be removed from the market overnight.
- Data and metrics on the crypto market – many tools and technology available that can help us predict the future of cryptocurrencies. For example, you can use Glassnode to monitor the blockchain activity of your coins, and you can choose Messari or Token Metrics to check the large transaction activities in the crypto market. These tools are artificial based applications, and it has been seen that many new investors have gained a huge profit by using such metrics.
Wrapping it up !!!
Cryptocurrency is decentralized money, and any government or bank cannot control it. Thus it has provided a newer mode of transaction that is far more efficient and cost-effective. It has also led to a rise in the investment in this field.But people consider bitcoin as stocks, bonds and commodities, which can decrease the value of the cryptocurrency over time. Decentralized currency is still evolving where no proper framework is available.
So, if you are interested in investing in cryptocurrency, you must choose the best platform from where you can track the performance of your digital assets. Bitcoin Era offers an easy-to-use platform wherein you can learn about the crypto trend and also start investing by completing a simple registration process.