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Question 2a. What is cryptographic currency, and how does it differ from conventional Currency?
A crypto currency is a perfect medium of exchange that is well designed to a particular destination either specified or understood securely and rightly exchanging details and information management that is a proper process made largely possible through certain given principles of cryptography to a great extent. It is to be highly remembered that in 2009, the initial crypto currency to started trading was Bit coin in the given open market with a lot of perfection. From that time, several crypto currencies have been in a successful manner created by experts and specialist in this particular field to a large extent. Basically, crypto currencies are descriptions regarding the proper use of given currency that seek in order to perfectly incorporate the given principles of cryptography to rightly implement a best distributed, definite decentralized and proper secure information economy in the given open market.
Most of the experts and specialists have aired their concern regarding crypto currencies that they are very risky largely due to their potential for the popular pump and dumb schemes and high volatility under any given circumstances and situations. On the other hand, some cryptocurrency systems have hidden launches, are perfectly pre-mined, or have good rewards for the initial miners. It is to be highly noted that pre-mining largely means currency is perfectly generated through the currency's original founders much prior to mining code that are being released in a successful manner to the public at large. It often refers in the given open market to a more deceptive practice. It can also be rightly be used as an inherent part and parcel of a digital crypto currency’s design, according to the case of Nxt or Ripple (Bradbury, Danny, 2013).
In the open market, with no novel technical developments and minor changes, most crypto currencies are rightly duplicates of existing crypto currencies. On January 7, 2014, "Coinye West" which is a comedy crypto currency that is perfectly making a more or less disguised reference to the rapper named Kanye West was served a cease-and-desist letter. It is to be highly remembered that conventional money is largely created through commercial banks by debt issuance, that depend on best interests and present or prevailing inflation in order to perfectly repay its inception at the initial place. In order to rightly function, the given system properly established around given conventional money that really requires structural economic development and growth that in a reckless manner neglects the needs and requirement of the Earth’s bio capacity and for the people in general. There is a lot of difference between the conventional money and crypto currencies in the given open market with its own identity and unique usage and characteristics to a large extent. These type of currency are the need of the hour in the given society and nation at large with a lot of perfection. The said currencies features are distinct in many aspects. Many critics have pointed out the loop wholes in the usage and improper transaction happening with the use of conventional money and crypto currencies in the given open market under any given situations and circumstances ( Matonis, Jon, 2013).
Question 2b. Cryptographic currencies have been particularly volatile, what are some potential causes of the observed volatility? If applicable provide data to support your viewpoint.
Initially, a breakthrough in a successful manner computer science achieved by Bit coin at its most basic level which is the one that was build on two decade of research into cryptographic currency with a lot of perfection. On the other hand, after four decades of research studies in cryptography, by good number of researchers and specialists in this particular field around the world, Bit coin in a perfect manner gives the general people for the initial time, a method for one particular Internet user to directly transfer a special piece of digital property such as bonds, stocks, contracts, signature and money to a large extent in the given open market with a lot of perfection to another Internet user. It is to be highly remembered that such type of transfer is completely guaranteed to be much secure and safe. Moreover each and everyone is aware and knows that the perfect transfer directly has taken place under any given situations and circumstances, and nobody can really challenge the perfect legitimacy of the given transfer. On the other hand, different types of consequences and results of this particular breakthrough are very hard to overstate to a great extent (Sullivan, arthur; Steven, Sheffrin, 2003).
In the given open market, Bit coin as a modern type of peer-to-peer payment system in which there is a method in order to exchange assets and money between sound parties with no pre-existing trust under any given situations and circumstances. The initial Internet-wide payment system where different types of transactions are either happens with very low fees and no fees in the given open market. On the other hand, the existing payment systems really charge fees of approximately 2 to 3 percent - and that’s perfect in the developed world. It is to be highly noted that in lots of other places, there either are the rates are significantly higher or no modern payment systems. It is perfectly right that Cryptographic currencies have been particularly volatile and there are some potential causes of the observed volatility in the given open market.
It is to be remembered that as a perfect digital currency, the leading and popular Bit coin has been declared as quite volatile, with fluctuations of large nature in value over months, weeks and days. In the present scenario, the given exchange rate of a bit coin has been much largely fluctuating between around $600 and $900 in the given open market with a lot of perfection. On the other hand, its perfect volatility is much largely mainly due to relatively low payment volumes and more speculation. However it is different types of positive qualities and quantities as a highly much secure digital payment system to a great extent. It is to be noted that many strongly believe that the said currency is much volatility will probably drive away the huge majority of merchants and individuals. According to the experts and specialists, they strongly believe that Cryptographic currencies have been particularly volatile and there are some potential causes of the observed volatility in the given open market (Carbaugh, Robert 2012).
- Carbaugh, Robert (2012). International Economics. Cengage Learning. p. 479.
- Sullivan, arthur; Steven M. Sheffrin (2003). Economics assignment: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 462
- Matonis, Jon ( 2013). "Bitcoin gaining market-based legitimacy as XBT". CoinDesk
- Bradbury, Danny (2013). "Bitcoin's successors: from Litecoin to Freicoin and onwards". The Guardian