In 2011, two years after the first cryptocurrency, bitcoin, was created, a man by the name of David Chaum coined the term “cryptocurrency.” Bitcoin was created by a group of people or an individual by the name of Satoshi Nakamoto in 2009. However, the word cryptocurrency became household and gained general acceptance in 2008, before other cryptocurrencies were created.
What is cryptocurrency?
According to International Monetary Fund (IMF), cryptocurrency is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. In other words, cryptocurrency is just like any other currency but with distinctive characteristics.
One characteristic of cryptocurrency is total autonomy, which means it is not regulated or controlled by any persons, agency, or government but rather runs independently by using a decentralized network of computers, known as nodes, which verify and record its transactions on a public digital ledger known as a blockchain.
From 2010-2014, cryptocurrency started gaining recognition and acceptance in Africa; this development was spurred by the launch of BitX, which is the first bitcoin trading platform in South Africa. Since then, the acceptance and use of cryptocurrency have skyrocketed in Africa. By 2018, Africa’s cryptocurrency market grew by 1,200%, according to a report by ChainAnalysis. Nigeria currently ranks first in crypto currency adoption in Africa and second in the world with a 9% yearly increase in transaction volume. Additionally, Kenya, Ghana, and South Africa have followed suit in the adoption of cryptocurrency in Africa.
Current Trends in Cryptocurrency
1. Airdrops
Recently, there has been a buzz and rush for airdrops, with users performing tasks mostly on Telegram and other mediums specified by cryptocurrency founders and developers. An airdrop is the cryptocurrency or tokens distributed by the founders of a crypto project for free to consistent users in a bid to reward active community participation.
Additionally, it is also used to onboard new users into cryptocurrency and build a community around the crypto project. Airdrops can take place during token generation events or after years to reward active users. The largest airdrop ever executed was the Uniswap airdrop in 2020, which rewarded users with up to $1,400 in their token.
2. Bull Market Emergence
Bull run is a word that has been used by many crypto experts and enthusiasts. This word is used to demonstrate the green days in the cryptocurrency financial market as against its counterpart, the red days known as bear. Since the start of 2024, bitcoin has gained over 150%. Experts have so far predicted that a bull run following bitcoin’s gain of 150% could last up to 2025, with bitcoin increasing to $77,000 by the end of 2024 and $123,000 by the end of 2025. Many investors, in anticipation of these events, have invested money in various crypto projects such as Ethereum, Solana, BNB, and many more with the hope of making profitable returns as the price of bitcoin increases.
3. Regulation
Since 2014, efforts have been made by government agencies to regulate cryptocurrency transactions. These efforts by the government have met so many successes. In 2017, the Chinese government banned the issue of initial coin offerings (ICOs), and the Japanese government introduced crypto regulation, among other breakthroughs. However, issues ranging from money laundering, terrorism financing, and tax evasion have been the standpoint government bodies are beckoning on to enforce the regulation of cryptocurrency.
Opportunities for Growth in The Cryptocurrency Industry
1. Web3 Development and Adoption
Web3, according to Wikipedia, is an idea for a new iteration of the World Wide Web that incorporates concepts such as decentralization, blockchain technologies, and token-based economics. By combining decentralization, blockchain, and token-based economics, Web3 has the ability to transform the internet into a more equitable, secure, and innovative platform.
However, following the origin of Web3, there have been jobs available in the sector looking to be filled out. Jobs in web3 include Blockchain developer, smart contract developer, Web3 UX designer, NFT designer, blockchain project manager, and Web3 content creator, among many other roles looking for qualified personnels to fill in.
2. Cryptocurrency Payment and Remittances
By 2025, it is projected that Africa’s cryptocurrency remittance market will reach a whopping $55 billion. This implies that opportunities are available to develop cryptocurrency-based payment platforms. These platforms can partner with local financial institutions to enable seamless integration, thereby offering safe and blockchain-based transactions.
Risks Involved in Cryptocurrency
1. Market Volatility
Despite cryptocurrency being profitable, it doesn’t remove its high volatility. This means that cryptocurrency can experience a sharp decline in value, causing losses to investors. These sharp declines are a result of the unpredictable market, making it difficult to forecast price movements.
2. Security Risks
Cryptocurrency assets can be at risk of hacking. As a result, exchanges, wallets, and transactions can be compromised by hackers. However, this will result in the stealing of data and loss of funds. To avoid these risks, ensure the diversification of portfolios among different wallets and exchanges to forestall total loss in the case of a breach. Additionally, enabling two factor authentication can serve as-a medium to enhance the strength of accounts.
Conclusion
In conclusion, cryptocurrency has emerged from a niche concept into a global financial outreach, influencing markets and economies worldwide. The decentralized nature of cryptocurrency has created innovative technology with both opportunities and challenges, particularly in regions like Africa, where adoption is still on the rise.
While the rise of Web3, airdrops, and cryptocurrency remittances offers exciting growth prospects, the volatility and security risks serve as reminders of the care needed when exploring the cryptocurrency market.
As cryptocurrency continues to grow, knowledge of the financial market will be the key towards maximizing its benefits while reducing its risks.
