Cryptocurrency Market

A cryptocurrency, often referred to as crypto, is a digital currency created to function as a decentralized medium of exchange within a computer network. Unlike traditional currencies, it operates independently of any central authority, such as a government or bank. Cryptocurrencies use a decentralized system to verify transactions, ensuring that the parties involved possess the claimed funds. This eliminates the need for

conventional intermediaries like banks when transferring funds between two entities. transferring funds between two entities. Ownership records of individual coins are stored in a digital ledger, a computerized database that employs strong cryptography to secure transaction records, control the creation of additional coins, and verify the transfer of coin ownership. Bitcoin, introduced as open-source software in 2009, was the pioneering decentralized cryptocurrency. As of March 2022, there are over 9,000 cryptocurrencies available in the market, with more than 70 having a market capitalization surpassing $1 billion.

In 1983, the American cryptographer David Chaum developed ecash, a cryptographic electronic currency. Subsequently, in 1995, he implemented it through Digicash, an early version of cryptographic electronic payments. Digicash necessitated user software for withdrawing notes from a bank, requiring designated encrypted keys (PIN numbers) before sending to a recipient. This design ensured the safety and untraceability of the digital currency by third parties.

In 1998, Wei Dai introduced “b-money,” a distributed electronic cash system. Around the same time, Nick Szabo developed “bit gold,” a precursor to Bitcoin and other subsequent cryptocurrencies. Unlike a gold-based exchange, bit gold was described as an electronic currency system where users had to perform a proof-of-work function, with solutions being cryptographically compiled and published.

In January 2009, Bitcoin was introduced and developed by Satoshi Nakamoto. From 2020 to 2022, Bitcoin experienced significant demand and utilized the SHA-256 cryptographic function in its proof-of-work scheme. In April 2011, another cryptocurrency named Namecoin was created with the aim of establishing a decentralized DNS. Litecoin was released in October 2011, gaining global popularity for its use of Scrypt as its hash function instead of SHA-256. Peercoin, introduced in August 2012, employed a hybrid of proof-of-work and proof-of-stake for transaction validation.

On August 6, 2014, the UK Treasury commissioned a study to explore the role of cryptocurrencies in fostering economic growth and determine the need for regulation. The final report, published in 2018, led to a consultation on cryptoassets and stablecoins in January 2021 to further understand and address regulatory considerations.

In June 2021, El Salvador achieved a historic milestone by becoming the first country globally to adopt Bitcoin as legal tender. The country’s Legislative Assembly voted decisively (62–22) to pass a bill submitted by President Nayib Bukele, officially recognizing and classifying the cryptocurrency as legal tender. Following this groundbreaking move, Cuba also embraced Bitcoin as a recognized currency in August 2021 through Resolution 215, marking a significant step in acknowledging and regulating cryptocurrencies.

In September 2021, the cryptocurrency market experienced a sudden downturn as the Chinese government, which constitutes the single largest market for cryptocurrencies, declared all cryptocurrency transactions illegal for payments. This marked the culmination of a broader crackdown on cryptocurrency trading, which had earlier involved the prohibition of intermediaries and miners from operating within China.