Is the Digital Currency Trend Overvalued?

Created in 2009 by the famously anonymous Satoshi Nakamoto, Bitcoin was the first of thousands of digital assets existing today. Although the digital asset sector continues to expand in value and adoption, the declaration by Randal Quarles demonstrates the polarizing aspect of cryptocurrencies. While many believe it is a gateway for a future of prosperity and bankless transactions, others credit it neither as a reserve of value nor as a hedging tool. So why are digital currencies not just an overvalued trend?

Security, Privacy, Speed – Digital Currency is the Ultimate Financial Innovation

The term "cryptocurrency" is the generic name for decentralized digital currencies, created on a Blockchain network that, through encryption, protects the transactions and data of those who operate it.

This unique technology works as a kind of ledger distributed among millions of users, in which everyone can transparently follow the operations. Hence, transactions take place directly between buyers and sellers (peer-to-peer), without the interference of any intermediary or financial entity (e.g., banks).

When added to a blockchain, a piece of data is saved within cryptographic blocks connected hierarchically, creating a chain of blocks, which makes the technology ideal for storing data in an extremely secure fashion.

Unlike the US dollar or other fiat currencies, cryptocurrencies only exist in the digital world. Hence, they cannot be kept within an average wallet or bank account, but they are stored in crypto wallets.

Variety is the Key – Countless Options of Digital Assets

Despite all the frenzy around Bitcoin, which is considered the "digital gold," there is a wide array of cryptocurrencies available on the market. Currently, there are more than 11,000 options of digital assets, according to data from Coin Market Cap.

Besides Bitcoin, people have a long list of equally promising assets that will certainly appreciate over time. You can buy Litecoin (LTC), Ethereum (ETH), and Cardano (ADA), as well as other less known options such as Fanton, StormX, and BabyMatic.

While it’s crucial to know the proposal of each project rather than randomly purchasing coins, the huge variety of coins/tokens created since 2009 is proof that digital currencies are here to stay.

Ever Growing Numbers – Why It’s Impossible to Hinder the Crypto Industry

The crypto industry is always in a constant process of growth and appreciation, especially considering it was born just twelve years ago.

In the first half of 2021 alone, the number of new Bitcoin (BTC) wallets storing coins grew 15%, jumping from 33 million to 38 million, according to market data. As a result, the total volume of BTC traded in the period increased by 489%, reaching $ 2 trillion. Meanwhile, the world’s second most valuable cryptocurrency Ethereum (ETH), which is considered the dark horse of cryptocurrencies, was not far behind. In the same six month period, ETH’s trading volumes actually grew faster that Bitcoin’s – increasing by 1,461% and reaching $1.4 trillion by the end of June.

Looking Forward to Spreading the Word – The Future of Crypto is Now

The consolidation of blockchain technology in several sectors demonstrates how robust and secure it can be in a wide variety of businesses applications. Industries such as logistics, healthcare, cloud computing, data storage, public services (e.g., voting mechanisms), as well as the banking and payments sectors are already using this type of system on a large scale.

Furthermore, new concepts are emerging that further expand the potential use cases for digital assets. One of them is the rise of NFTs (Non-Fungible Tokens), which work as a type of digital certificate that makes files unique and authentic. Virtually, it is possible to turn everything into an NFT – digital art, music, videos, photographs, GIFs, memes, gaming items, documents, personal IDs, ownership titles, deeds to property, etc.

Another innovation related to cryptocurrencies and blockchain technology is DeFi (Decentralized Finance). Using smart contract technology, staking, and other innovative tools in financial applications, DeFi enables the tokenization and decentralization of processes such as loans, payments, transfers, and asset brokerage. In short, it’s a disruptive idea that aims to implement a multi-platform ecosystem that is completely decentralized and bankless, with no intermediaries involved at all.

Why Digital Currency Is Not Just an Overvalued Trend – Final Thoughts

It is impossible to deny the impact of cryptocurrencies in the financial scenario. While it was regarded as a "deep-web-type of stuff" at the beginning, now it’s clearer than ever that the concept came to stay.

With growing institutional acceptance and adoption by industry-leading figures such as Ray Dalio, Tyler and Cameron Winklevoss, Richard Branson, and Michael Saylor, it is plain to see that, sooner or later, the "crypto-skeptics" will be proved wrong.

Editorial Note: This is a sponsored article. Opinions expressed are solely those of the sponsor and readers should conduct their own due diligence before taking any action based on information presented in this article.