Five facts about cryptocurrency worth knowing

There is still a lot of volatility in the digital asset market.

1. The value of the cryptocurrency market exceeded $1 trillion for the first time in its 12-year history
   According to the service for analyzing cryptocurrencies CoinMarketCap, January 7 cost of one of the most popular cryptocurrencies – bitcoin (BTC) – reached a historical maximum and exceeded $ 39 thousand for the year bitcoin rose in price several times: back in March its price was $5 thousand. Bitcoin market capitalization crossed the mark in $ 700 thousand, and the total market capitalization of all cryptocurrencies now, as calculated by the Independent, exceeds the combined value of payment systems such as Mastercard and Visa. According to Konstantin Anisimov, executive director of the CEX.IO cryptocurrency exchange, the digital currency will become more and more attractive for institutional and private investors. The expert believes that in the near future, the value of BTC will continue to rise and by the end of the first quarter of 2021 will reach $50,000.

However, Independent reminds that the cryptocurrency is still unstable. On January 11, there was a sharp collapse in quotes: the price of bitcoin dropped by almost $10,000. But then it began to grow again and at the close of trading on January 14 was $36,000. According to some experts, a sharp increase may be followed by a decline. “If we see big investors dumping bitcoins on the market, the price could fall as low as $20,000 to $23,000,” says Simon Peters, senior analyst at eToro, an online social trading platform. Bank of America chief investment strategist Michael Hartnett also points to a possible collapse. He called bitcoin “one of the biggest financial bubbles” and warned that the surge in its value could be the result of speculative mania.

Other cryptocurrencies, including Ethereum, Litecoin and Bitcoin Cash, have also been rising in value over the past few months. In particular, Ethereum – the so-called ether, the second most capitalized cryptocurrency – has risen more than 600% in a year. Now its value exceeds $1,200. Ethereum is an open platform with a built-in programming language that allows developers to create their own blockchain applications. It was created by Russian programmer Vitalik Buterin and launched in 2015.

The exception to the growing digital currency market was Ripple: its value more than halved in the last month. This is due to the fact that the Securities and Exchange Commission (SEC) accused the company of violating the Securities Act passed in 1933. The SEC alleges that Ripple raised more than $1.3 billion by selling unregistered securities under the guise of digital assets.

2. The first federal cryptocurrency bank appeared in the U.S.
   U.S. startup Anchorage, which offers digital currency custody services, has become the first federal cryptocurrency bank in U.S. history. The company received the corresponding license from the Office of the Comptroller of the Currency (OCC), which is part of the Treasury Department. Anchorage President Diogo Monica said the company is a national bank, but unlike other financial institutions, it works with cryptocurrency assets. He added that once it is authorized by the OCC, Anchorage will be subject to federal laws rather than individual state laws, which will make its operations much easier.

U.S. cryptocurrency exchange Kraken also received a banking license in September 2020. The company’s customers can now use digital assets to pay bills and investments, as well as get paid in them. Right now, the company serves customers in the state of Wyoming. However, it hopes to become a “bridge” between the cryptocurrency market and the traditional economic system and scale its activities worldwide.

3. 20% of existing bitcoins are stored in wallets whose owners do not have access to them
   According to estimates by Chainalysis, an analytical company that studies blockchain technology, there are now more than 18.5 million bitcoins in the world. However, 20% of them, worth a total of $140 billion, are in lost or blocked wallets. According to The New York Times, many people became cryptocurrency owners ten years ago, when bitcoin first appeared and was worthless. However, the sharp rise in the cryptocurrency’s value has forced wallet owners to step up. Wallet Recovery Services, a digital key recovery company, receives about 70 requests every day, three times as many as it did in December.

Thus, Stephan Thomas, a programmer from San Francisco, told reporters that he lost the password to the hard drive, which stores 7,002 bitcoins, or more than $260 million at current exchange rates. The storage device allows you to enter the wrong password 10 times, after which it is completely locked. Stephan Thomas has already used eight attempts. The programmer admitted that he is frustrated with the way cryptocurrency is set up: he doesn’t like the idea of people having to be banks for themselves. “The reason we have banks is because we don’t want to do what they do,” the man says. Gabriel Abed, a 34-year-old entrepreneur from Barbados, said he lost about 800 bitcoins. The passwords were stored on a laptop that his colleague had formatted years ago. And James Howell, an IT professional in Wales, accidentally threw away a hard drive containing 7,500 bitcoins in 2013. Now he’s asking city officials to let him search the landfill and promises to give city residents 25% of the amount in the wallet.

As The New York Times reminds, the creator of bitcoin, known under the pseudonym Satoshi Nakamoto, wanted to make it so that everyone in the world could open a purse without registering at a financial institution or undergoing identity verification. Cryptocurrency is a complex algorithm that creates an address, or login, and an associated key (password) known only to the owner of the wallet. When conducting transactions, the software confirms that the password entered is correct, but does not see the combination itself. As a result, bitcoin owners are reliably protected from government control.

4. Cryptocurrency has no official status in most countries
   The legal status of cryptocurrencies varies from country to country. For example, Japan recognized bitcoin as a means of payment back in 2017. This currency can be paid for in some stores, including online venues, beauty salons, cafes and restaurants. In 2017, the cryptocurrency gained official status in the Republic of Belarus. President Alexander Lukashenko signed a decree “On the Development of the Digital Economy,” which allowed citizens to buy, sell, exchange, and donate cryptocurrency, as well as engage in its mining (mining). These activities are not considered entrepreneurship and do not have to be declared. In Switzerland, a “Blockchain Law” is being developed, which should facilitate the development of decentralized financing. In particular, companies will be able to issue digital analogues of stocks and other tradable assets. Heinz Tännler, president of the Swiss Blockchain Federation, said that the country’s regulatory framework for cryptocurrencies will be one of the most advanced in the world. Some 900 blockchain companies have emerged in Switzerland over the past few years, including cryptocurrency banks, cryptocurrency vaults, and real estate businesses.

European Commission President Valdis Dombrovskis in late September announced new regulations for cryptocurrencies and stabelcoins – digital assets tied to fiat currencies (legalized in a particular state), including the dollar and euro. In particular, the agency plans to consolidate the sphere of digital financial services. The need for regulation of the cryptocurrency market was recently discussed by the head of the European Central Bank Christine Lagarde. She said that bitcoin is a “highly speculative” currency that could be used for money laundering. Lagarde called on the G7 or G20 countries to cooperate on this issue.

5. Mining harms the environment, but more “green” cryptocurrencies are emerging
   In 2019, scientists at the Technical University of Munich estimated that the blockchain network that serves bitcoin consumes 45.8 TWh of electricity each year. As a result, 22 to 22.9 Mt of CO2 is released into the atmosphere each year. This is comparable to the carbon footprint of countries like Jordan or Sri Lanka. The researchers noted that the amount of electricity consumed by cryptocurrency is constantly growing, which is due, among other things, to the development of technology.

Now there are more and more cryptocurrencies in the world, which are designed to improve the environmental situation. For example, the U.S. company KWHCoin has created a digital currency with the same name, which can be obtained in exchange for electricity from renewable sources. The platform is based on blockchain technology and makes it possible to simplify the process of buying and selling clean energy. A similar cryptocurrency, SolarCoin, is aimed at developing solar energy. Energy producers register their installation and open a wallet that acts as a bank account. For each MWh of energy produced, they receive one Solarcoin, which is now worth $0.016. Another “green” cryptocurrency is EverGreenCoin: anyone who buys tokens supports renewable energy, water conservation, health and land use projects around the world.