Within the past year, cryptocurrencies have gone from being an obscure part of the financial world to taking centre stage. The Wall Street Journal reported that as of May 2021, the total value of all cryptocurrencies was worth around US$2.2 trillion, up from $260 billion a year ago.
Image Credit: Wall Street Journal A cryptocurrency is a digital asset that can be used to buy goods and services. However, it differs from fiat currency as it uses a decentralised, or peer-to-peer online ledger — a blockchain — to secure transactions.
The blockchain cannot be altered, which means that funds and goods can be transferred trustfully. This increases transparency and reduces the possibility of fraud.
In the span of 12 months, bitcoin — the world’s most popular cryptocurrency — exploded from trading at US$8,166 on 8 March 2020 to hitting record highs of over US$61,000 in March 2021.
A chart of Bitcoin prices from 23 June 2020 to 23 June 2021 / Image Credit: Coindesk Other cryptocurrencies such as ether and dogecoin have also surged to heights that few would have predicted a year ago.
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