Cryptocurrencies

Who doesn't want to capture or create more value like money? Money is any item or verifiable record of value that is generally accepted as payment for goods and services and repayment of debts in an economic and social context. As a medium of financial exchange, money can be a standard of value, an accounting unit, and a means to store exchanging power.

A currency is money in any form, circulated as a medium of exchange within a jurisdition, and a cryptocurrency is an encrypted string of data or a hash to signify one unit of digital currency stored electronically in a blockchain worldwide. Encryption techniques control the creation of additional digital monetary units and confirm the transfer of funds by miners in distributed cryptocurrency networks. Blockchain miners compete to solve a cryptologic puzzle by finding a hash that connects the new block of data for the ledger with its previous block - incidentally solving the double-spending problem - would be rewarded with a cryptocurrency.

Legal challenges on cryptocurrencies include possible new regulations that control the disruption of central banks' monopolies in the production of money, and the operation of cryptocurrency exchanges as some less popular cryptocurrencies have to be traded for popular ones via them. Technical challenges include the maintenance and sustainability of the entire complex blockchain system that provides and protects the cryptocurrency ecosystem. Self wealth-management challenges include whether to store your cryptocurrencies in cryptocurrency exchanges, and how to safeguard the private key of your wallets as its loss would stop you from opening any transaction with the cryptocurrencies in your address.

While China and South Korea have already banned speculation on cryptocurrencies and Russia would block websites selling Bitcoins, the Philippines and Japan have licensed certain cryptocurrency exchanges, and Japan has even accepted Bitcoin and other virtual currencies as legal tenders. European banks are either creating its own digital currency for internal circulation or trying to create the digital equivalents of major currencies backed by central banks. In the final analysis, I believe, all these boil down to a question of control at various levels - we all must take a prudent risk management approach in this new money business!

#Cryptocurrencies