Cryptocurrencies are volatile global markets that are affected by various stock indexes, government decisions, and other events; hence, market crashes are pretty regular.
While crashes are always expected, there are some events that either boost adoption or prove to be a great hindrance in the process.
Below is a list of seven such cases, that have changed cryptocurrencies, for better or worse.
The world of digital currency is constantly changing, growing, and evolving. Although it is a relatively new industry, cryptocurrencies continue to surprise us with every turn of events. One moment there's a hack or security breach; the next, there is some ground-breaking development or partnership announcement. The digital currency space is unpredictable, exciting, and scary all at the same time. This article will explore some of the most important events that changed the crypto sphere forever. Each has been instrumental in guiding the industry on an accelerated growth trajectory and positioning it for greater adoption by mainstream consumers moving forward. Let's take a look.
Cryptocurrencies are digital assets designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. While the concept of digital currencies has existed for decades, it wasn't until 2009 that Bitcoin emerged as the first decentralized cryptocurrency.
Since then, the industry has exploded, with new coins and tokens emerging regularly. Today, there are over 2,000 cryptocurrencies in circulation. The majority of these are alternative coins, or "altcoins," that have occurred since Bitcoin's launch. While many projects are legitimate and hold value, many fraudulent altcoins exist purely to scam investors.
That said, the industry's growth has been nothing short of remarkable. Cryptocurrencies have already proven that they can exist outside of the centralized financial system, and thousands of people have already begun using them as a means of payment for goods and services.
Bitcoin was originally designed to be a fully decentralized network, with no central authority controlling the blockchain. However, that was never the case in practice, as a small number of mining pools have always controlled the bulk of the network's hash power. That changed in 2018 after China attempted to shut down its domestic Bitcoin mining operations. As a result, many of the world's largest mining pools moved their operations to other countries and away from the Chinese government's jurisdiction. However, this dramatic shift in hash power distribution has placed centralized mining operations in a dominant position. This has raised concerns among long-time Bitcoin enthusiasts, who fear that the network is becoming increasingly centralized.
A DAO is a decentralized autonomous organization that was designed to operate as a hybrid venture capital/token-distribution system. It raised more than $100 million worth of ether during its crowdfunding campaign and amassed a significant percentage of the Ethereum network's hash power. In June 2016, however, the DAO was hacked, and around $50 million was stolen from investors.
In the months that followed, the Ethereum community was split over how to deal with the situation. The majority of Ethereum developers believed that the blockchain should be rolled back, effectively erasing the hack from the record. However, a significant minority of the community believed that the only way to combat hacks effectively was by allowing the blockchain to progress without interference. Eventually, the Ethereum network was forked, with the majority of its users agreeing to roll back the blockchain and effectively erase the hack. This created two separate blockchains: Ethereum(ETH) and Ethereum Classic(ETC).
While not technically a hack, the fact that Ripple no longer owns the majority of XRP in circulation is significant. In 2012, the company created 100 billion XRP and retained control of 60 billion of them. While the remaining 40 billion XRP were released into the wild, Ripple holds a significant amount of control over them. XRP is not mined like Bitcoin, so Ripple has the power to release more XRP into the market at will. This led many to question Ripple's promise that XRP is not a security but a legitimate cryptocurrency.
BCH was created after a group of Bitcoin developers and miners initiated a hard fork of the Bitcoin blockchain in 2017. This was done in protest of Bitcoin's slow transaction times, high fees, and unsustainable energy consumption. BCH was launched as a new Bitcoin-based blockchain that promised to prioritize the preservation of quick transaction times and low fees. While BCH has seen a lot of adoption, many in the industry have criticized the project's leaders for failing to distance themselves from their connection to Bitcoin. As a fork of BTC, BCH shares many of its predecessor's limitations, including both a capped coin supply and reliance on proof-of-work mining.
In 2017, a group of entrepreneurs created a cryptocurrency known as Dogecoin. The DOGE was a fun, ridiculous currency that served as a way for people to tip each other online with a token that had no real value.
Dogecoin has since become one of the most widely used cryptocurrencies on the Internet.
In fact, it has become so popular that Elon Musk, the eccentric CEO of Tesla, appeared to be enamored with it. Dogecoin fans were thrilled when they learned that Musk was accepting the cryptocurrency as payment for a Tesla-branded solar panel kit. This love affair went on for more than a year until the bear market dawned. Elon Musk changed the meaning of meme coins and how the community pursues them.
Similar to investing in gold or stocks, purchasing bitcoin requires that investors buy and store the digital asset. While this process is both simple and safe, it is also very inconvenient and expensive. For many who would like to invest in bitcoin, purchasing cryptocurrency and secure storage is difficult and complicated. Additionally, trading and selling bitcoin can be a long and confusing process, particularly for new investors. That said, bitcoin is a compelling digital currency that is revolutionizing the way we exchange value, transact, and store wealth. The ability to easily purchase, store, and sell bitcoin is a key factor in accelerating its adoption and placing it within greater reach of mainstream investors.
Before the end of the bull market last year, Bitcoin's first ETF passed, making a solid regulatory statement implying that the world, governments, and banks finally recognize cryptocurrency's value.
Terra is a project that promises to build a decentralized, blockchain-based, cloud-computing network. This network was powered by the LUNA token. The unique selling point of Terra's network is that it would be powered by the sale of LUNA tokens. They even had various in-house DeFi projects and a stablecoin UST, the algorithmic stablecoin's value was pegged to the US Dollar, and its supply indirectly corresponded to the LUNA token.
The network couldn't take the heavy volatility of the market and massive shorts on the Luna token, which led to a de-peg of the UST token, which accelerated into full-blown sell-offs and the whole ecosystem collapsed, vanishing more than $50 Billion from the market directly and was a significant cause of the market crash in May.
Cryptocurrencies have come a long way since bitcoin was released in 2009. Now, millions of people all over the world use digital currencies as a means of exchange. With the industry continuing to expand and grow, there is no doubt that digital currencies will play an essential part in the future of money. Events like the ones mentioned in this article are important because they show how cryptocurrency networks are evolving and changing as the industry grows. With more competition in the space and increasing adoption, networks will have to adapt to stay relevant.