Digital currencies are a reality that overturns traditional schemes not only in terms of finance and economy. For this they need a modern fertile ground in order to grow. This terrain is made up of technological innovations, openings to digitization and long-term investments. What is the perfect country for the development of the crypto market?
There are more than 10 thousand cryptocurrencies in circulation today, each different but with similar characteristics. Determining the ideal country of a digital currency implies an accurate knowledge of what is the basis of the currency itself. Also, what its future objectives are.
The essential conditions for the development of crypto market
The concept of digital currency was born with Bitcoin, an innovative, revolutionary idea with a touch of provocation that breaks the walls of the traditional financial system. A very complex market has evolved from the initial definition of cryptocurrency.
For a digital currency to exist, therefore, a few fundamental elements are needed: users, blockchain technology or a modern technology. These elements must then be dissected into subgroups in order to analyze the ideal conditions for the development of each digital currency.
Recognizing the differences between cryptocurrencies: mining
Currently there are more than 10 thousand digital coins on the network. They are mostly related to video games, the so-called gaming cryptocurrencies. The differences between these are mainly identified in the conditions of purchase and sale and creation.
Starting from the production we find two main categories and others that are still in the process phase. The two main ones are: Proof of Work and Proof of Stake, two consensus mechanisms that involve different procedures for putting a digital currency into circulation.
Dash and Monero for example come from mining that involves the use of super computers to solve complicated cryptographic calculations. The person who solves the calculation sells the cryptocurrencies on the market and receives a reward.
Recognizing the differences between cryptocurrencies: the exchange
In terms of buying and selling, everything gets complicated. It is important to establish what is the specific goal of the developers of a cryptocurrency. In the case of Bitcoin, the goal is exchange. In fact, it is the cryptocurrency that enjoys the widest acceptance among merchants and service providers.
Ether on the other hand is a digital currency designed to be used on the Ethereum platform. Therefore does not seek to expand like Bitcoin. This in part also justifies the different consensus mechanisms that have been adopted by one and the other.
Many other cryptocurrencies are valid only in specific contexts, for example a particular video game, and are used to make the exchange of services within. This, both between players and between a player and the virtual store.
These conditions imply greater or lesser attention to user privacy and the speed of transactions. Although Bitcoin is the best known cryptocurrency for trading on a commercial level, its transactions are slow and not entirely anonymous.
The ideal conditions for the development of digital currencies
Given these necessary premises, it is very difficult to define what could be the ideal country for the development and growth of a digital currency. For each it is necessary to identify the basic conditions. Also, to determine the benefits and the disadvantages with respect to the incentives and regulations of each nation.
For a digital currency like Bitcoin – with huge expansion and a demanding technological system – mining is perhaps the most important problem followed by user privacy. Mining involves the use of a large amount of electricity which has a cost and an impact.
The best country for the development of bitcoin will therefore be the one that encourages mining with renewable and low-cost energy sources.
Ether which instead recently adopted the Proof of Stake consensus will no longer have the need to worry about the electricity to draw on but to check that this new mechanism does not lead to the centralization of resources and regulation.