With the advent of cryptocurrencies into the mainstream financial system, it\u2019s not strange anymore when you can see that the front page of a business newspaper contains the headlines, \u201cBitcoin is the best asset class of 2020,\u201d \u201cInvestors flock to Dogecoin after Elon Musk\u2019s tweet\u201d or \u201cTesla will now accept Bitcoins as payment.\u201d A combination of various financial constraints and favors as well as the support of a mighty few have helped in lifting up the price of these currencies to unprecedented heights. While writing this, Bitcoin is just shy of reaching an all-time high of 50,000 US dollars, which I believe, it can easily touch given the current euphoria continues on. But does the current mandate of many investors that provides cryptocurrencies such high valuations justifiable, or is it just another bubble ready to burst? In this article, I will try to declutter some of the mist and present the true scenario. So, let\u2019s get started.Photo by Bermix Studio on UnsplashBefore we know how Bitcoin or cryptocurrencies as a whole are intertwined with the economy, it is prudent to understand how Bitcoin works and how it is created. Basically, Bitcoin is based on blockchain technology. In simple terms, it\u2019s kind of like a network where the data shared or transaction details between any two nodes of the network are stored in the form of blocks. These blocks are then connected by chains or links, which shows the continuity between the blocks. These blocks are decentralized, and hence it is not stored at a particular node or location. When Satoshi Nakamoto created Bitcoin or the blockchain network as a whole, certain protocols were implemented, which ensures that the transactions in the blocks can never be altered, and the issue resolving mechanisms would ensure that there is no inconsistency between the\u2026<\/p>","protected":false},"excerpt":{"rendered":"
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