Cryptocurrency: When money gets digital
Cryptocurrency is digital money that uses cryptography for financial transactions. It regulates the creation of new units of currency and also used as the medium of exchange. They are unchangeable entries in a database that can only be changed if specific conditions are fulfilled.
The first cryptocurrency introduced to the public in 2009 was Bitcoin. The Bitcoin market gathered a lot of attention and made a floating market of 17 million bitcoins with a market value of around $140 billion in total. Remarkable response to bitcoin paved way for several other cryptocurrencies like PPCoin, Namecoin and Litecoin.
Benefits and downsides
The moment things start happening at a click of a button, life looks easy. Bitcoins offer easy transactions online ensuring safety. You must be wondering that the same happens for bank money also. Well, cryptocurrency uses certain securities keys, safe methods to carry out fund transfers. There is no chance of saving the details related to the bank account or any other personal information.
They follow a blockchain technology that uses to store an online ledger for all the transactions happened in bitcoin ever since. Therefore, creating a data structure for this ledger that has a limited threat from hackers. It can be accessed and copied to all the computer having Bitcoin software. Any change or addition in data is verified by the ledger of each user in the market that saves it from registering any transaction history. However, it is impossible not to have a way out, when there are makers of a new technology, there would be destroyers too. If the security system has been made strong, there must be brilliant brains working on decoding or hacking the new system or methodology. Therefore, with everything online and virtual there is a huge risk.
With benefits, it has drawbacks too since there is no account of cryptocurrency. You have no record or balance that you can claim in case of system failure. If your system crashes and you don’t have a backup of your holdings. Currency exchange gets difficult as the prices fluctuate extensively.
Cryptocurrency promotes anonymity that makes the process risky as then the person is open to do offence like not paying the tax or money laundering.
Therefore, there are many risks associated even though there have been wise strategies adopted in the world of virtual currency.
Uses of cryptocurrency
With the growing popularity of cryptocurrency, it has got a wider acceptance both offline and online. There are several merchants that accept bitcoin as a mode of payment. Bitcoins can be used like the usual money for buying tickets, paying at restaurants or hotels or paying your college fee, etc. There is a special market dedicated to only accepting cryptocurrency as the only mode of payment.
Cryptocurrencies are an easy investment but are high risk investments. There is a lot of movement and fluctuation in the market. Also, since it is new to the system, it cannot be said if it is going to last long. The system or the transactions can be hacked anytime.