The Rising Cryptocurrency in the Last Two Years: Factors Driving the Popularity and Challenges Ahead

Cryptocurrency has been a hot topic in the financial world for the past decade. However, in the last two years, the popularity of cryptocurrencies has skyrocketed. This has been fueled by several factors, including increased adoption by businesses, the rise of decentralized finance, and the COVID-19 pandemic.

Factors behind rising cryptocurrency

One of the main drivers of the rise in cryptocurrency is the increasing adoption of blockchain technology by businesses. Blockchain is a distributed ledger technology that allows for secure and transparent transactions. It eliminates the need for intermediaries, such as banks, and reduces the risk of fraud. This has made it an attractive option for businesses looking to streamline their operations and reduce costs.
Another factor contributing to the rise of cryptocurrency is the growth of decentralized finance (DeFi). DeFi is a new type of financial system that operates on blockchain technology. It allows for peer-to-peer lending, borrowing, and trading, without the need for traditional financial intermediaries. This has opened up new opportunities for individuals and businesses to access finance and invest in new projects.
The COVID-19 pandemic has also played a role in the rise of cryptocurrency. The pandemic has caused economic uncertainty and volatility in traditional financial markets. This has led many investors to seek out alternative investments, such as cryptocurrencies, which are seen as a hedge against inflation and economic instability.
Bitcoin, the first and most well-known cryptocurrency, has been the main beneficiary of this rise in popularity. In the last two years, its price has surged from around $3,500 in early 2019 to over $60,000 in early 2021. This has led to a renewed interest in cryptocurrencies and has prompted many investors to explore other cryptocurrencies, such as Ethereum, Litecoin, and Ripple.
Ethereum, in particular, has seen a significant rise in popularity in the last two years. Ethereum is a blockchain platform that allows for the creation of decentralized applications (dapps) and smart contracts. It is the second-largest cryptocurrency by market capitalization, behind Bitcoin. In the last two years, its price has increased from around $100 in early 2019 to over $4,000 in early 2021.
The rise of cryptocurrency has not been without its challenges, however. One of the main concerns is the lack of regulation and oversight. Cryptocurrencies operate outside of traditional financial systems, and there are concerns that they could be used for illicit activities, such as money laundering and terrorism financing. Governments and regulators around the world are grappling with how to regulate cryptocurrencies without stifling innovation.

Challenges

Another challenge is the volatility of cryptocurrency prices. Cryptocurrencies are highly speculative and can experience significant price swings in a short period. This has led some investors to view them as a risky investment. However, proponents argue that the long-term potential of cryptocurrencies outweighs the short-term volatility.

In conclusion, the rise of cryptocurrency in the last two years has been driven by several factors, including increased adoption by businesses, the growth of decentralized finance, and the COVID-19 pandemic. While there are challenges to be addressed, such as regulation and volatility, the potential benefits of cryptocurrencies are significant. As the world becomes increasingly digital, it is likely that cryptocurrencies will continue to play an important role in the financial system.