Money facilitates the exchange of goods and also serves as a unit of account and as a store of value. Its use is based on the general confidence in its acceptance as a means of payment and that its value will remain stable over time.Click here for bitcoin price.
In modern societies we use cash (banknotes and coins) and bank deposits, which constitute the money supply, as money. The central bank, first, and the private banks, subsequently, are responsible for creating the money supply, that is, money, and maintaining its value.
Episodes such as the great crisis of 2007-2008 represent a decrease in confidence in the banking system and its supervisors.Visit this site for bitcoin price.
The earlier representation of cryptocurrencies
It is not surprising that cryptocurrencies appeared in 2009 as a form of digital money that does not have an issuer (as they are traditionally known) and that does not depend on the banking system for transmission or registration.
They can be known as crypto tokens (virtual or cryptocurrency). There is no general definition. The European Central Bank points out that crypto assets are digitally registered, depend on cryptographic techniques and are not the liability of any identifiable entity nor do they represent a financial claim against it. In their definition, they would be out of regulation. However, both the Fed and European regulators point out that some crypto assets have characteristics that assimilate them to securities, especially those issued through ICOs (initial coin offering) and must comply with their regulation.
The best known is bitcoin – are exchanged directly between the parties through encrypted messages, transactions are validated in chronological blockchains and their registration is the responsibility of all participants, who update them after validation (technology of distributed records).
In the world of cryptocurrencies third parties intervene, and there can be reduced digital security. There are entities that carry out purse work, exchange markets and gateway entities that allow the exchange of the cryptocurrency for currency or goods. Episodes of cyber-attacks in markets and theft of cryptocurrency portfolios have created shadows of distrust so that they can be an alternative to money.
The supply of cryptocurrencies
Thus, despite the fact that there are some 1,900 cryptocurrencies in the world, estimates by the European Central Bank indicate that its market capitalization reached a maximum in January 2018 with 650,000 million euros, to subsequently decrease to as much as 100,000 million euros in the first months of 2019; This value represents around 1.2% of the money supply in the euro area.