cryptocurrency market has evolved in an unprecedented and rapid way over its short lifetime. Since the release of the anarchic cryptocurrency, Bitcoin, to the public in January 2009, more than 550 cryptocurrencies have been developed, most of which have only limited success. Research into this industry is still rare. Most of it focuses on Bitcoin instead of the various spreads of cryptocurrency and is slowly being overtaken by liquid industry developments, including new currencies, technological advances, and increased government regulation in the markets.
Under the Bitcoin protocol, all transactions over a period of time are collected in something called a block. This block is then distributed to all nodes currently connected to the Bitcoin network. Bitcoin uses the Hashcash PoW method, first proposed by Adam Back in 1997. Under this machine, in order to agree on a set transaction set, each node takes a block and begins to add a piece of data to a block called a nonce, so that (block + nonce), when inserted into the hashing algorithm, has hash that meets certain requirements – in this case, it starts with a certain number of zeros. Therefore, each node attempts to solve complex mathematical calculations, the result of which can be easily verified by combining a single hash. Because only one block can be verified at a time, the chances that the area to be resolved by the appropriate hash increase in proportion to the amount of CPU power used. Therefore, the materials used in this example are electricity and time, which is really rare.
BITCOIN MINING: The whole process has passed each node called mines, because in each verified block, the node (now miner) receives a fee for its service. Miners want a reasonable profit, so in order to encourage individuals to mine, the
Bitcoin law offers rewards in two ways: transaction funds and newly made coins, called mined coins. Each block chain underpinned by the Bitcoin protocol introduces new coins into the market, which are offered to the miner as payment for energy and time spent. This number is declining over time so that there will never be more than 21 million BTC available. In this way, Bitcoin works the same way for commodities such as gold: “A steady increase in the value of new coins is like gold miners using resources to add gold to distribution”. Therefore, over time, transaction fees will need to increase in order to compensate miners accordingly. Therefore, as the mint rate slows down in the Bitcoin network, “it may ultimately put pressure on increasing transaction fees to maintain a preferred level of security”.
Gauging the public perception of an emerging concept – especially one that involves a certain level of risk and the potential to drastically change current status – is often difficult, as many factors contribute to shaping it. Proof of success or failure, however, plays a role in informing public opinion. In the cryptocurrency industry, three major indicators of success are market capitalization, limited number of cryptocurrency users, and daily trading volume. All three of these factors make the system legal as it reflects the level of trust placed on it. These numbers will serve as indicators of the extent to which cryptocurrency has been accepted by the public, which is one metric for measuring public opinion. The exact number of cryptocurrency users is unlikely to be determined. Even estimates are difficult to determine with firm conviction, as one of the key features of the cryptocurrency industry is the level of anonymity offered to its users. Undoubtedly the most accurate way to measure the number of users to check the number of wallets created. As of May 2015, the largest online wallet known as “My Wallet” is approximately 3.3 million. While this provides an indication of the number of users, it is also important to remember that it is possible for one user to have multiple wallets or open a wallet without having Bitcoin in it.
Fear has led many companies, including banks to reject cryptocurrency embedding in their systems. Although Bitcoin was established as an alternative to the strict rules and restrictive regulatory environment of centralized financial systems, this is one of the main concerns among investors. The system works with evidence rather than trust, but overcoming dependence on the latter seems proven difficult and sustainable, last but not the least the future of cryptocurrency is very much sceptical.
