A Narayanan et al, 2017). It is driven

A cryptocurrency is defined as a developing digital asset class
which is designed as to function as a medium of exchange which utilizes
cryptography in securing its transactions, controlling creation of extra units
and verification of transfer of assets (Sontakke & Ghaisas, 2017). These
type of currencies are categorized as a subset of virtual currencies and
alternative currencies. This is the latest topic of discussion in the financial
world because people have become enlightened with this kind of currencies. The
crypto currency market cannot be ignored because of its high growth rate and
are trading across 40466 trading markets (Hileman & Rauchs, 2017). These
currencies are not subjected to any governmental intervention or regulations.
The most important cryptocurrencies include Bitcoin and Ether (Hileman &
Rauchs, 2017). A Blockchain platform is a base of cryptocurrency. It is a
platform where the transactions are held and validated (Underwood, 2016). This
paper analyzes how the relatively unknown market of cryptocurrencies
(Bitcoins& Altcoins) is expanding.

Main body

            Bitcoin was first described by
Nakamoto in 2009 as ‘A purely peer-to-peer version of electronic cash that would
allow online payments to be sent directly from one party to another without
going through a financial institution (Sontakke & Ghaisas, 2017). It’s
mining functions on the Proof of Work System (Sontakke & Ghaisas, 2017).
During the verification process of the transaction, the miners are required to
have the whole date of previous transaction (block) and have to spend a notable
amount of computing power on the ongoing transaction (Sontakke & Ghaisas,
2017).  Also, three consensus
transactions are needed besides verification which also help in price
determination and expansion (Sontakke & Ghaisas, 2017). On the other hand,
Ethereum was proposed by Buterin in 2013 and features smart contracts which
enhance online contractual agreements (Arvind Narayanan et al, 2017). It is
driven by proof of work system that is measured as ‘gas’ rather that direct
power consumption (Arvind Narayanan et al, 2017). The prices retract after
78.6% but have strong resistance at 226-241 price level (Arvind Narayanan et
al, 2017). Ripple is the third most popular cryptocurrency (Arvind Narayanan et
al, 2017). It offers blockchain platform to financial institutes to
considerably reduce transaction time and costs (Arvind Narayanan et al, 2017).

 Bitcoins and altcoin have
similarities and differences when it comes to mining power also referred to as
“harsh rate” (Arvind Narayanan et al, 2017). This is due to the eminence of
hash-based puzzles. For instance, Zeta coin which utilizes SHA-256 mining
puzzles the same as Bitcoins (Arvind Narayanan et al, 2017). However, Bitcoins
have powerful miners and mining pools which control more mining power than deployed
for the entire altcoins (Arvind Narayanan et al, 2017). In terms of allocation
of currency to users, Bitcoin is done only through mining while for the
Altcoins through mining and other ways such as pre-mining (Arvind Narayanan et
al, 2017).

A blockchain was established with the aim of creating the concept of
cryptocurrency (Sontakke & Ghaisas, 2017). The system starts with one
requesting a transaction which is then broadcasted to p2p network that
comprises of computers as nodes (Sontakke & Ghaisas, 2017). The next step
is validation which involves the network of codes which validates the
transaction and also the user status utilizing algorithms (Sontakke &
Ghaisas, 2017). All the verified transactions are put together to form a block
of data which creates a chain of blocks. After the verification process
currency or tokens of the platform are generated then the miners receive it as
a contribution reward (Sontakke & Ghaisas, 2017).

According to a research, the current population of unique users of
cryptocurrency wallets is approximated to be between 2.9 million and 5.8 million
(Hileman & Rauchs, 2017). Also, the lines between the different
cryptocurrency industry sectors are inclining blurred (Hileman & Rauchs,
2017). For instance, 31% of the cryptocurrency organizations surveyed are
functioning across two cryptocurrency industry sectors or more (Hileman &
Rauchs, 2017). This gives rise to an increasing population of global
cryptocurrency organizations. Also, it was found out that about 1,876 persons
are working full-time in this industry (Hileman & Rauchs, 2017).

There are two main price drivers of cryptocurrency namely supply and
demand (Sontakke & Ghaisas, 2017). Since cryptocurrency is generated solely
as a reward for verification of transaction i.e. through mining its supply is regulated
(Arvind Narayanan et al, 2017). The amount of currency that is generated in the
lifetime is usually predetermined thus making it scarce and very valuable (Sontakke
& Ghaisas, 2017).  On the demand
factor, the prices are scaling new heights every day and are driven by global
demand (Sontakke & Ghaisas, 2017).

The risks of cryptocurrencies include money laundering and
trafficking of illegal substances related to various types (Brezo &
Bringas, 2012).  This is because this
type of currency use of online entrainment platforms which uses proxy and
anonymisation systems such as vpn – networks (Brezo & Bringas, 2012). It is
also associated with scams such as Pump-and –Dump whereby they use various
techniques to exaggerate the potential of altcoin and also drumming up interests
(Arvind Narayanan et al, 2017).

An Initial Coin Offering (ICO) is utilized by startups to evade the
burdensome and regulated capital-raising process needed by the banks or venture
capitalists (Sontakke & Ghaisas, 2017). Ethereum or Ether tokens is an
example of a successful ICO project which was profitable to the initial investors
(Sontakke & Ghaisas, 2017). Additionally, an unsuccessful ICO is harmful to
the cryptocurrency platform (Sontakke & Ghaisas, 2017).

Cryptocurrency is not issued by any non-governmental or governmental
organizations hence it is immune to intervention and interferences by the said bodies
(Chuen, 2015). Therefore, in case of any disputes or fraud the government
cannot protect anyone (Chuen, 2015). 
Cryptocurrency is decentralized and does not involve a lot of legal
issues (Chuen, 2015). Other countries have ban coining of money hence in such
nations it is illegal.

Conclusion

            In conclusion, from the aspects that
have been discussed in the paper, cryptocurrency market expanding involves
explanation of the price determinants which include supply and demand.  The main type of cryptocurrencies used are Bitcoin
and Ether. The industry is expanding every day with more people being employed
and using this type of currency which is a reward for their contribution. The
working of this kind of currency involves use of a blockchain that comprises of
verification process.  After the
verification process is when one is rewarded for what he or she has
contributed. This type of currencies also faces a number of risks including
money laundering and trafficking of illegal items but still the Cryptocurrency
market is a fast growing market and probably will grow even further in the
future.