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Issues About Other Cryptocurrencies

In January 2009, a pseudonymous cryptographer known as Satoshi Nakamoto introduced Bitcoin as a digital analog to gold: limited in supply, but secured by modern cryptography, and made for the internet age. Following in Satoshi’s footsteps, many tried to improve his original vision and thousands of alternative cryptocurrencies were born.

Bitcoin and alternative cryptocurrencies are starting to see widespread adoption. The innovation behind cryptocurrencies is that, instead of relying on a trusted third party, transactions are recorded and propagated in a distributed ledger known as a “block-chain.” This allows transactions to be trustless, censorship-resistant, permission-less and private. Once a transaction is confirmed by the block-chain network it becomes irreversible. It can’t be charged back through a dispute process like other forms of money transfer.

Cryptocurrencies promise to radically change how we do banking by removing artificial barriers caused by legacy financial institutions and allowing for:

  • True peer-to-peer payments anywhere in the world.
  • Minimal transaction fees and processing time compared to traditional banking.
  • Payments between pseudonymous parties ensuring financial privacy.
  • Non-reversible transactions preventing charge-backs and fraud.

Unfortunately, Bitcoin and many other cryptocurrencies, showing volatility, sometimes reaching 30% loses or more for even one day - currently do not provide favorable opportunities to effectively use them as money, for example, as a medium of circulation. At the moment, they are rather an object of speculative investment, which showed retrospectively high profitability and losses, which cannot guarantee high profitability in the future. Bitcoin and many other cryptocurrencies do not have any backing. Their price is mainly determined by the ratio of supply and demand. The absence of any backing is used by official governments to condemn cryptocurrencies and point out the signs of “soap bubbles” in them.