THE CURRENCY OF THE FUTURE

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A look into the world’s leading cryptocurrency startups

For thousands of years, humanity has become accustomed to the practice of trading resources for resources. In current times, we call this a ‘transaction’ which occurs when one party (a buyer) gives money to another party (a seller) in return for a good or service. However, the concept of money didn’t start exactly like this. Initially, trading used to be an agreement between two parties who would provide each other with certain goods or services. For example, a farmer may give 10 kg of rice to a merchant in exchange for a pair of shoes. This is better known as a Barter System. Then in the later periods arrived commodity money, which was the use of various commodities as currencies or mediums of exchange, e.g. corns, shells, etc. Commodity money had inherent value, which means it had some value or usage of its own other than being just a medium of exchange. Around those times the usage of metallic money gained popularity, which is the use of metals as currency, e.g. gold, silver, nickel, brass, copper, bronze, etc. These metals varied in value, shape, and size. After tons of modifications and advancements in the realms of ‘money’, arrived the concept of fiat money, a medium of exchange or currency, that has government decree. Unlike metal and commodity money, fiat money doesn’t hold any inherent value. Without a government decree, it has no value of its own. However, the advancements in the monetary system don’t stop there.
With progress in computer technology, the idea of Fintech was developed, which is the term used to refer to technological innovations in financial services. Fintech gave rise to digital currency. There are mainly two types of digital currencies: Electronic money and Cryptocurrency. Electronic money refers to money that exists in a device such as a chip card or a hard drive of the banking computer systems that may be used to facilitate an electronic transaction. Cryptocurrency is a virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double spend. Many cryptocurrencies are decentralized networks distributed across a large number of computers based on blockchain technology. Although electronic money and cryptocurrency differ across a wide range of aspects, the major difference between electronic money and cryptocurrency is the fact that electronic money is backed by fiat currency which distinguishes it from cryptocurrency. The decentralized structure of cryptocurrency allows them to exist outside the control of governments and central authorities. Three major facts about cryptocurrency are that:
1) They are not connected to any sovereign currency
2) They are not backed by any authority such as a Central Bank, and hence are not a liability of any authority
3) The institutions that are actively developing and operating these schemes are non-banks.
In recent times, the rise of crypto has been dramatic. It is now widely regarded as ‘the future of money’, and many prolific business personas have talked in favor of it, including the likes of Tesla CEO, Elon Musk.
The first-ever decentralized cryptocurrency was Bitcoin, brought to widespread trade and existence in 2009. Ever since its creation, Bitcoin has experienced an immense boost in growth. The basic errors of the banking system have been exposed with the uprise of Bitcoin. Not only did Bitcoin grow, but it also paved the way for numerous other forms of cryptocurrencies, also known as altcoins. Although initially crypto faced resistance, a lot of businesses worldwide now accept cryptocurrency as a payment method. The growth of Bitcoin is such that its market cap added up to $1072.21 billion in February 2021. An interesting fact about Bitcoin is that the peak number of daily bitcoin transactions globally was reported to be 367,536 in the first quarter of 2021. In eight years, from 2012 to 2020, Bitcoin has experienced a gain of 193,639.36%. It is expected that the global blockchain market will go up to $23.3 billion by 2023 and the market size for cryptocurrency is forecasted to reach a total of $1087.7 billion. The 2021 user index demonstrates that there is 97% confidence in cryptocurrencies. Countries all over the world are rapidly adopting cryptocurrency and Turkey is leading the race with the highest rate of adoption, clocking in at 20%. These are just a few of the jaw-dropping growth statistics that evidence the prosperity and growth that crypto has achieved in the global market. However, there is more. COVID-19 is not the only thing that is contagious right now. The word of Bitcoin is spreading like a wildfire across the world. Every three seconds, a Bitcoin-related post surfaces on social media. This adds up to 1,203 posts an hour on average. As we know, word of mouth (or shall we say keyboard?) is the best kind of marketing. In February 2021, the price of Bitcoin went up by $20,000, which in the previous month was valued approximately at $30,000. That is a 66% appreciation in value within just one month. What is even more shocking is the fact that Bitcoins used to cost $10,000 each only a year ago. This equates to a 400% increment in value by the first quarter of 2021. In 2020, another cryptocurrency, Ethereum, had around 1 million daily transactions, and the global cryptocurrency exchanges clocked upwards of 300.
The boom of cryptocurrency and the widespread adoption of crypto led to the birth of numerous cryptocurrency startups in various regions of the world. Some of the top European cryptocurrency startups are Kaiko, SEBA Bank, Bitwala, Elliptic, and Nexo. Kaiko is a French startup founded by Ambre Soubiran and Pascal Gauthier in 2014 with a funding of 5 million Euros. Kaiko is a provider of data related to digital assets, covering top cryptocurrency exchanges. It gathers, normalizes, and facilitates the availability of raw and aggravated data to its clientele to achieve a competitive edge in the market. SEBA Bank has its origin in Switzerland. It was founded in 2018 by Guido Buehier and has a funding of 88 million Euros. The aim of SEBA Bank is to offer corporate financing and banking services to its corporate clientele, guidance about initial coin investments, and other sorts of cryptocurrencies. Elliptic is a crypto startup based in London. It was founded by Adam Joyce, James Smith, and Tom Robinson and the company started its operations in 2013 with a funding of 27.3 million Euros. Elliptic ensures the reduction of risk involved in Bitcoin transactions by identifying illicit activities occurring in the blockchain of Bitcoin and then facilitates the provision of actionable intelligence to law enforcement agencies and financial institutions, thus, making transactions of cryptocurrency safer, more transparent, and more reliable.

Although initially crypto faced resistance, a lot of businesses worldwide now accept cryptocurrency as a payment method. The growth of Bitcoin is such that its market cap added up to $1072.21 billion in February 2021.

However, Europe is not the only continent where cryptocurrency startups are reaching heights – Asia is not slacking either. Asia boasts several emerging cryptocurrency startups with the likes of DACSEE, HARA, Electrify, Yojee and Tripio. DACSEE or Taxi, short for ‘Decentralized Alternative Cabs Serving & Empowering Everyone’ is a Malaysia-based startup that is causing a stir in the ride-sharing industry of the nation by the usage of blockchain tokens as currency. Although the taxi market in Malaysia is already oversaturated, DACSEE gains a competitive advantage by offering additional value that competitors do not. DACSEE enables users to repeatedly ask the same driver for rides. It also allows them to block unsafe or rude chauffeurs. The startup also offers commission to passengers on each ride taken by anyone to whom the passengers gave their specific sign-up code. The company makes use of the Ethereum cryptocurrency to carry out its operations. HARA is an agriculture-based Indonesian cryptocurrency startup that is intended to assist the growth of agriculture in rural Indonesia. The company helps farmers of Indonesia share real-time information and other sorts of data. HARA’s system enables farmers to earn blockchain tokens that can be used to make purchases of equipment and fertilizer. It also facilitates micro-loans to farmers, increasing the accessibility of money to small lenders. It was launched by the Indonesian startup Dettabot in the year 2015, and since then the company has won multiple awards and changed the lives of many.
Every good thing has its fair share of pros and cons, and cryptocurrency does not come without its drawbacks. Although crypto has received worldwide recognition for its portability, divisibility, inflation resistance, and transparency, experts have often criticized it for its usage in illegal activities. Cryptocurrency also tends to be volatile in terms of exchange rates. Moreover, there are still many existing vulnerabilities inherent in the infrastructure underlying the entire system of cryptocurrency. However, if cryptocurrency can move past those shortcomings, then the future of money will inevitably be crypto. Right now it is a market with very high potential, especially considering its booming recognition, increasing the market cap, rise in rates of adoption, increasing transactions, and dramatic appreciation in value over such a short period. However, someone should do their research properly before investing in Bitcoin or any other cryptocurrency, as the market still is not 100% stable and the system has its shortcomings. Thus, consulting or hiring an experienced financial advisor is highly recommended before making initial cryptocurrency investments.

By Farhat Zishan

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