Cryptocurrency is the modern innovation that has pointed towards the direction of a global decentralized financial market. In simple words, cryptocurrencies are digital money designed using cryptography to secure payments and prevent counterfeiting these digital transactions. A cryptocurrency does not represent any physical value like real-world money such as a Dollar, Euro or a Rupee. It can be visualized as a vast network of connected computers in a virtual environment. These cryptocurrencies operate using decentralized networks based on blockchain technology.
Have you ever wondered, If the cryptocurrency market is all about money then what is the size or market capitalisation of all cryptocurrencies? How many cryptocurrencies are there? How does the cryptocurrency market operate? What technologies are being used by cryptocurrency developers?
Did you know that as of 7th May 2022, the total Cryptocurrency Market Capitalisation is $2 Trillion.
What is Cryptocurrency?
As defined above, cryptocurrency is a digital currency designed using cryptography to make secure payments through a vast network of interconnected computers. The cryptocurrencies are based on blockchain. And Bitcoin is the most famous and unique cryptocurrency ever. Other cryptocurrencies are created after researching bitcoin. One may say other cryptocurrencies are extensions of bitcoin.
Cryptocurrency is also known as crypto among its hardcore global fans. The first step to owning a cryptocurrency is to open a digital wallet. These digital wallets of every user are connected to the virtual network where every transaction is secured using private and public keys.
Cryptocurrencies use decentralized platforms which are designed to be used for peer-to-peer transactions without being liable to any government or a central bank are the latest financial innovations explored not only for the reasons of their being secure but also for potential risks and opportunities in the financial industry.
How Cryptocurrency Works?
Blockchain technology is the backbone of cryptocurrency. Before we get into crypto stuff, let’s revisit some basic knowledge on blockchain and how it works.
The term blockchain can be divided into two parts: Block and Chain. Here, a block represents a space where certain data of transactions is being stored. As new transactions keep on happening in the blockchain network, data of transactions are being stored on these distributed ledgers called blocks. After each block receives data, some cryptography is applied to secure the data and store them on a distributed ledger where everyone can view the information. Each of these blocks are aligned in ways where the previous block is easily accessible from the current data of a block, thus forming a chain and getting the name blockchain.
A blockchain is a decentralized network without any central figure to interfere with the transactions and keep records that are authenticated by most of the computers running on the network.
Since now we are familiar with what powers cryptocurrency, let’s dive deep into how cryptocurrency works.
Cryptocurrencies use a blockchain because it offers an immutable distributed shared ledger. It means that if an attempt is made to alter the data of one block, the cryptographic links between blocks get disrupted identifying the transaction as fraud.
How Does Cryptocurrency Mining Work?
The process of checking recent cryptocurrency transactions and adding new blocks to the blockchain is known as cryptocurrency mining. The processes of checking transactions and adding new blocks are explained below.
1. Checking Transactions
From a pool of pending transactions, the mining computers choose a transaction and try to verify if the sender has enough money to complete the transaction. This is done by comparing the transaction details to the transaction history on the blockchain. After that, the second check verifies that the sender used their private key to authorize the transfer of funds.
2. Creating a new block
As transactions keep on happening, the mining computers collect the valid transactions and compile them into a new block and try to generate a cryptographic link to the previous block by solving a complicated algorithm. When a computer successfully generates the link, it saves the block to its own copy of the blockchain file and broadcasts the update to the rest of the network.
The 5 Reasons Why Cryptocurrencies are so Popular
1. Crypto charges low transaction fees
Cryptocurrencies have very low transaction fees associated with them. Other types of payment systems such as banks have high transaction fees.
2. Cryptocurrencies are decentralized
Decentralized means without any interference from a third party. It also provides anonymity because it is fairly difficult to trace the location of transactions.
3. Cryptocurrencies are easier to use
The best thing is transactions happen very quickly and easily. Nowadays, all you will need is a cryptocurrency wallet to use and trade digital money.
4. Cryptocurrencies offer huge potential for profit
Investing in cryptocurrencies is a lucrative business. No doubt that the cryptocurrency market is most volatile but patience and well-accumulated knowledge of crypto can make you rich.
5. Cryptocurrencies are new future
If in future we are to live in a digital world such as the metaverse, then crypto will be the most valuable asset that you can possess.
Key Stats on Cryptocurrency
Cryptocurrencies are changing how the world operates. Cryptocurrencies are introducing the safest way of transactions. Due to this, many companies have started accepting crypto payments which gave huge momentum to crypto industries.
- Bitcoin in Feb 2021, crossed a $1 trillion market capitalization making it the first cryptocurrency to do so.
- On May 19th 2021, the 24th trade volume of the cryptocurrency market surpassed 500 billion US dollars.
- According to research data over 30000+ Bitcoin posts are posted on social media every single day, which means around 1250 posts are posted per hour.
- The total market capitalization of all the cryptocurrencies is $2.80 trillion which is close to the 9th largest economy in the world.
- More than 15000+ companies accept bitcoin payments worldwide.
- There are over 18000 cryptocurrencies worldwide which is a huge number.
Bitcoin’s Market Capitalization Boom
Bitcoin, the prominent and mostly used cryptocurrency crossed $ 1 trillion market capitalization in the Feb 2021, this huge boom made bitcoin the first cryptocurrency to achieve this milestone and the reason why bitcoin surged is that it got accepted by some of the most popular companies such as Tesla, Mastercard and other. The number of mainstream investors is increasing day by day hence giving the edge to cryptos to nourish their market cap.
It’s not yet clear to say that these cryptocurrencies will flourish in the near future, as the whole cryptos and their marketplaces are volatile and can get affected by different factors such as social media. One of the cryptocurrencies’ main issues is that they heavily depend on how people accept them and how the media portray cryptos.
Cryptocurrency Market Trade Volume
The crypto boom is continuing to gain huge momentum because of increasing crypto users worldwide. As the number of people increases so does the number of crypto transactions resulting in massive trade volume. On the 19th of May 2021, the 24th trade volume of the cryptocurrency market crossed 500 billion USD. As more businesses accept crypto payments it’s most likely that they will keep on using it in the future and as their competitors realize how crypto can be beneficial for their business, no doubt they will adapt to the same strategy. To keep it in simple words, there is a high probability of cryptocurrencies being used in top MNCs and other big companies which will increase cryptocurrency market trade volume.
Popularity of Cryptocurrencies
Cryptocurrencies suffered to get recognition and acceptance a decade ago, but as people realized their advantages and their secure way of making a transaction eventually they became a center of attention to everyone. Bitcoin is the first and the most popular cryptocurrency in the world with the highest market cap value, and nowadays every social media platform is filled with its posts. According to research data, over 30000+ bitcoin posts are posted on social media every day, which means 1250 posts per hour. This data represents the surging popularity of bitcoin and is continuing to increase everyday. Other cryptos such as Ethereum, Litecoin, Cardano, and Tether are likely to gain immense momentum as they are introducing new algorithms such as proof-of-stake, proof-of-activity, and proof-of-capacity that can run on low power to greatly reduce the carbon footprints created by cryptocurrencies.
Total Market Capitalization
No wonder the statistics of these cryptos are jawbreaking but if we put the numbers together then you may say it’s unlike anything you have ever seen. Though it all started with bitcoin, different cryptos enhanced the industry by introducing new methodologies that are more efficient and fast to make transactions. As we discussed earlier, bitcoin alone reached the milestone of $1 trillion market capitalization, but judging the numbers of every other crypto, the combined market capitalization of all is about $2.80 trillion which is close to the 9th largest economy in the world. This is a huge number and it shows how the industry is evolving over time and we can’t deny the fact that it may surpass any of the top 5 largest economies in the world.
Acceptance of Cryptos in Various Niches
New technological innovations happen every single day and they only gain popularity if they could be used by major and most industries worldwide. Crypto on the other hand offered solutions that online traditional banking can’t such as an unbreakable security system, faster transactions, and anonymity and for this reason, organizations around the world have started accepting crypto payments. Bitcoin is the most common crypto used by various industries and an estimate suggests more than 15000+ companies accept bitcoin payments, for many of you this might be a low number but as its relatively new niche it has revolutionized everyday transactions
New Cryptocurrencies and Their Unique Features
No doubt Bitcoin revolutionized the crypto industry, but it also had its disadvantages such as its complex functionalities, not being as fast as compared to other cryptos and proof-of-work algorithm which consumes high power. Developers around the world observed bitcoin and its problems and started creating their own cryptos which introduced unique features such as new consensus algorithms such as proof-of-stake, and proof-of-active which are more effective, consume less power and allow faster transactions. Currently, there are over 18000 cryptocurrencies used worldwide with their own unique features that make them stand out from others.
Size, Share And Analysis of Cryptocurrency Market
As we have covered most of the part focusing on the basics of cryptocurrencies and how they work, why they are popular and key stats, let’s move ahead to some research data that reflects the future of cryptos.
You can make an estimate that crypto markets will boom in the coming years displaying their gigantic size. Many factors affected the boom of crypto such as covid, digitization and availability of faster internet service, one may ask how come covid is responsible for the boom of cryptos? Well, it didn’t but as covid hit many companies were forced to operate remotely with their employees and clients and of course since everyone has access to internet crypto and its news stormed on the internet making everyone get aware of the concept, also many companies felt their transaction weren’t that much secure hence they chose a completely different transaction method knowns as crypto transactions.
Digitization and availability of the internet play a key role in the surging popularity of cryptos as they spread the boom of crypto to every other person in the world through social media and other platforms, as a result, many got aware of cryptos and their need in various industries.
According to research data the cryptocurrency market size reached 1,782 billion USD in 2021 and is expected to reach 32,420 billion USD by the end of 2027, indicating a CAGR of 58.4% from 2022 to 27. Also, the APAC region(Asia Pacific) is likely to have a high CAGR of 14.5% because of the crypto boom in China, India, Japan, South Korea and other Asia Pacific regions.
How Hardware Control the largest size of Crypto markets
Cryptos are added to the blockchain by a process known as minting, and as we discussed it requires solving complex mathematical expressions to add new blocks to the chain which again generates crypto coins and the one who solves it gets it as a reward. This process requires heavy computational data processing which can only be carried out by specific hardware such as GPUs, CPUs, ASIC, FPGA and others. This hardware is the prime need of the crypto market. Without hardware, cryptos will not survive, as many generate new coins by using GPU farms they depend on hardware. For this reason, it’s clear to say that hardware and the hardware and major hardware companies will control and will hold the largest size of the crypto market.
Major Key Players in the Cryptocurrency Market
- AMD(Advanced Micro Devices).
- Nvidia Corp.
- Intel Corp.
- Bitman.
- Ripple Labs.
- Bitfury Group.
Miner will have the largest share of the cryptocurrency market as they mine those coins with top-level hardware resources. Many mining rigs are available for these crypto miners to get started and earn coins by mining but the process is not that simple as it requires a long time to solve the mathematical equations which again consumes high power. For this reason, miners might be the shareholders of the crypto market in future.
Conclusion
As per the cryptocurrency market research, the cryptos are reflecting a promising future which will attract more businesses and people around the world to consider crypto payments in their daily professional life. Just like every other technology crypto also has some flaws which no one should overlook as their money will be on the line, but as new innovations and new consensus mechanisms storm this industry it will become a state of the art transaction method nourishing its future and industry. The above data will surely help you understand the direction of crypto markets and the rate they are growing so one can invest in cryptos accordingly.
