Crypto

Besides the highly complicated matter, many people have never heard of cryptocurrencies. However, within a short span of few years, their popularity has grown overnight. Most of the times in financial markets the reason for such occurrences is the strong demand of traders. Accordingly, in the case of the derivative market, we can find the drivers both quantitatively and qualitatively. Therefore, the dealers and the clients both drives formed an upward trend in the implied volatility. Given that shared under a truly decentralized technology, these currencies are more resilient and anti-Federal Reserve.

Key Features of Cryptocurrency:

  • Decentralization: Cryptocurrencies were created to be decentralized, which means that no single entity, for example, a government or a financial institution, controls them.
  • Blockchain Technology: This is the technology implemented that keeps track of all the transactions in a public, untouchable ledger, that is, both transparency and security are guaranteed.
  • Cryptography: The latest cryptographic methods are employed to ensure the security of the transactions, oversee the generation of new units, and substantiate transfers.
  • Anonymity and Pseudonymity: Although the transactions are recorded on the public ledger, the identities of users are often pseudonymous. (Most of the time if transactions are recorded on the public ledger the identities of the users will be pseudonymous.)
  • Digital Nature: Cryptocurrencies have no physical form and are only available in the digital format kept in digital wallets that use a private key as the means of access.

Popular Cryptocurrencies:

  • Bitcoin (BTC): The first and most well-known cryptocurrency, created in 2009 by an anonymous person or group known as Satoshi Nakamoto.
  • Ethereum (ETH): Ethereum, which is best known for the Turing-complete smart contract capabilities, is much more than the currency, it is the platform for decentralized applications.
  • Ripple (XRP), Litecoin (LTC), Binance Coin (BNB), Cardano (ADA), etc., are other popular cryptocurrencies.

Use Cases:

  • Digital Payments: Sending money worldwide with fewer charges than traditional banking.
  • Investments: The majority of people use cryptocurrencies as an investment tool hoping that they will be worth more in future.
  • Decentralized Finance (DeFi): Developing financial applications that work on decentralized networks with no intermediaries.
  • Non-Fungible Tokens (NFTs): Exclusive digital assets based on blockchains prevalent for art, collectibles, and games.

Despite a significant rise in the market, it is a well-known fact that cryptocurrencies are also subjected to volatility and risks.