Understanding How Cryptocurrencies are Impacting the Global Markets



Cryptocurrency is becoming the new financial investment strategy amongst companies.

Cryptocurrency is a digital currency which is used for financial transactions across the web, using cryptographical functions. Since its inception in 2008, cryptocurrency has become the exponential entity in global financial transactions. Bitcoin, being the first cryptocurrency has become the most invested cryptocurrency over the years, Currently, there are more than 18000 cryptocurrencies available in the market, with ethereum, libra, and XRP as some common names.

In 2017, the Bitcoin prices soared between US$1000 to more than US$19000, after its sharp decline. Initial Coin Offerings (ICOs) rose to more than US$ 3.7 billion in 2017, followed by which other cryptocurrencies due to the market. In the past 12 months, the price of Bitcoin has been increasing, with the current value at US$16,813.


Working of Cryptocurrency

Cryptocurrency works with the concept of Blockchain technology. A blockchain is a form of the digital ledger, with a decentralised system for the transaction. This means that unlike other currencies, cryptocurrency does not require an agent, or a government body to carry out the transaction. Additionally, every transaction’s detail is stored in the digital block of a server or system, connected with other systems and made available to the public. This is the reason why tracking transactions made with cryptocurrency can be easily tracked.

Additionally, when a transaction is made via cryptocurrency, tokens are generated which represents the ledger entries internal to the system. However, cryptocurrencies are extremely volatile. Its value can go extreme fluctuations, something which happened in the year 2017.


Global Landscape of Cryptocurrency

Currently, experts view different opinions regarding cryptocurrency. While some experts view that the global pandemic has led to an increase in cryptocurrency investment, others observe that investments in cryptocurrency will lead to another financial crisis.

Despite this, companies are already investing in this new mode of transaction. Most companies invest in cryptocurrencies by either buying or selling. Grayscale is the key investor in Bitcoin. The New-york based firm currently holds 449 596 BTC, at a value of US$5.1 billion, and representing 2.14% of the digital assets total circulating supply. Another Nasdaq listed company Microstrategy, a mobile software developer and a cloud provider, is making headlines with the most investments in cryptocurrency. In a recent move, the company has announced a purchase of a total of approximately 38,250 bitcoins for an average purchase price of about $11,111 per BTC, at an aggregate purchase price of $425 million.

On November 12, PayPal opened crypto services for millions of eligible account users. Last week, in a major move Jack Dorsey’s Square Inc bought 4,709 bitcoins at an aggregate purchase price of $50 million. The big tech giant Facebook announced today that it would be launching its cryptocurrency Libra by January next year.


Wrapping Up

Undoubtedly cryptocurrencies are becoming the most desired investment across Wall Street companies. Due to its frictionless transaction, experts view it as an asset equivalent to gold. However, cryptocurrencies’ performance is yet to be unveiled across global markets; as the world gets pushed towards a major economic crisis.