Mubashir Husain Rehmani is a lecturer in the Department of Computer Science at Munster Technological University (MTU). Husain Rehmani received a BEng degree in computer systems engineering from Mehran University of Engineering and Technology, Jamshoro, Pakistan, in 2004; a MSc degree from the University of Paris XI, Paris, France in 2008; and a PhD degree from the University Pierre and Marie Curie, Paris, in 2011.
Cryptocurrency is a computer-based currency, or digital currency, which is managed through a computer network (blockchain). This blockchain system helps to maintain the ledger of transactions to buy and sell the cryptocurrency. Due to the use of strong cryptographic algorithms, these digital currencies are known as cryptocurrencies.
Assets can be classified as fungible and non-fungible. Fungible assets are identical, and mutually interchangeable, ie, they can be exchanged for others of the same value and type. For example, minerals, metals (silver, gold), and currencies are example of fungible assets. Assets like real estate, and diamonds are non-fungible as each carry unique qualities and, thus, their value can be determined individually. Assets can also be digital (video, audio, jpeg image, documents, and cryptocurrencies) and, in this case, these digital assets will be non-tangible (ie, not physically present).
The value of cryptocurrency comes from the trust of the blockchain network ie, the users of any specific cryptocurrency. The user of cryptocurrencies determines its value by the demand and supply of the cryptocurrency in the cryptocurrency market.
First, you need a cryptocurrency wallet so that you can store cryptocurrencies such as BTC, XRP, or ETH. You also require interacting with cryptocurrency exchange services to convert euro into cryptocurrency.
It depends. Some buy NFTs for investment purpose and others for using it. One of the most expensive NFTs is, which is a digital work of art containing 5,000 images and was sold for US$69m. Looking at such expensive NFTs; investing in NFTs has gained momentum. You can also buy NFTs if you want to “use” NFTs as the digital media right owner of the asset.
NFTs have the potential to redefine digital property rights. With NFTs, one can claim the digital media right owner of the asset (original work). This protects the true ownership and can bring new business models as compared to first-sale doctrine.
Each NFT has a unique identifier, making it unique and different from other NFTs in the market, and represents the ownership of the digital asset. The traceability, provenance, and the current rightful ownership of the digital asset can also be maintained through NFT.
There are a few reasons as to why the cryptocurrency market is so unstable, or volatile. First, due to the supply-and-demand gap of cryptocurrencies. Second, these cryptocurrencies are not backed by the central bank or governments. Third, cryptocurrencies do not intrinsically contain any value itself ie, these cryptocurrencies are not backed by gold, silver etc (though gold-backed cryptocurrencies are now available in the market). Moreover, there are other factors as well which impact on the volatility of cryptocurrency, such as high energy consumption in the mining process. In simple words, cryptocurrencies are highly speculative.
Cryptocurrencies are not recognised by traditional banks because cryptocurrencies operate in a different way than reserve currencies. First, cryptocurrencies are decentralised in nature (based on blockchain, plus the fact that users can be located geographically anywhere in the world). Second, cryptocurrencies do not have any legal status or regulated by the Central Bank of Ireland and other central banks in EU. Third, there is no government which backs the cryptocurrency. Fourth, cryptocurrencies do not have intrinsic value. Finally, there are issues related with Know Your Customer (KYC) and anti-money laundering and countering of financing of terrorism (AML/CFT) obligations. Therefore, cryptocurrencies are not recognised by traditional banks.
The cryptocurrency market is highly volatile, therefore, the return on investment (ROI) sometimes is also high (risky as well, in my opinion). In January 2021, one BitCoin (BTC) was worth more than €30,000. In October 2021, it was worth more than €53,000, and in April 2022 it was more than €37,000. The same trend can also be seen in Ether (ETH). Imagine, if someone invested with 1 BTC in January 2021, the profit it gets in October 2021 woud have been more than €23,000 in less than one year. This is a huge amount and that is the reason investors and people around the globe are attracted to investing in cryptocurrencies. There is another side of the coin. If someone invested with 1BTC in October 2021 and now wants to sell 1BTC, the loss will be more than €23,000 which is a huge loss. Another reason for investing in cryptocurrency is due to the momentum in NFT market. Since cryptocurrencies are required to buy NFTs, it therefore also has some effect on investment in cryptocurrencies. In summary, investment in cryptocurrency is “so hot right now” because of the profit it provides. Investment in cryptocurrency is some sort of gambling investment and it pays off extraordinary returns with high levels of risks.
For anyone interested in getting involved in cryptocurrency and NFT market, my personal suggestion is to avoid investing in cryptocurrencies and NFTs until they are recognised by the central banks and/or governments.
Developing and programming your own NFT, you need some technical knowledge about Ethereum blockchain and smart contracts.