Want to know what is cryptocurrency? Then take a few minutes to read through this blog post.
Cryptocurrency is a virtual or digital asset that serves as a medium of exchange. Crypto currency employs cryptography to control additional units’ creation, secure transactions, and verify assets transfer. The cryptography feature makes counterfeiting cryptocurrency difficult. The organic nature of cryptocurrency is its most endearing allure. This currency is not issued by a central authority. As such, cryptocurrency is theoretically immune to manipulation or interference by any government.
What is cryptocurrency? – Anonymity of a virtual currency
Generally, crypto currency transactions have an anonymous nature. This makes them suitable for nefarious activities like tax evasion and money laundering. Bitcoin was the first cryptocurrency to capture public imagination. The coin was launched by Satoshi Nakamoto in 2009 and by 2015 more than 14.6 million bitcoins were already in circulation with their market value standing at $3.4. Several cryptocurrencies have emerged over the years following the success of bitcoin.
Benefits of cryptocurrency
Now that you know what is cryptocurrency, it’s wise to know the advantages of cryptocurrencies. Crypto currencies make transferring funds in any transaction easier. Private and public keys that enhance security facilitate the transfers. What’s more, fund transfers that use cryptocurrency include minimal fees. Thus, cryptocurrency users avoid the hefty fees that most financial institutions like banks charge for wire transfers.
Block chain is at the core of Bitcoin. This stores the online ledger of the transactions that are conducted using this cryptocurrency. It provides a data structure of the ledger with minimal exposure to threats by hackers. The ledger is accessible and possible to copy using a computer that runs Bitcoin software.
According to experts, block chain has crucial technology uses that include crowdfunding and online voting. Major financial institutions note that cryptocurrencies have the potential to lower overall transaction fees because they enhance efficiency in payment processing.
In simple terms, many observers highlight the following benefits of cryptocurrencies:
- They preserve value
- They facilitate efficient exchange
- Cryptocurrencies have easier transportation than hard metals
- They are not influenced by governments and central banks
Disadvantages of cryptocurrencies
A cryptocurrency is virtual. That means there is no central repository for cryptocurrencies. As such, a computer crash can wipe out the balance of a digital cryptocurrency if the holdings do not have a backup copy. Since demand and supply dictate prices, exchange rates for cryptocurrencies are prone to wide fluctuations.
Additionally, crypto currencies are exposed to hacking threat. For instance, within the short history of Bitcoin, the firm has experienced more than 40 thefts. These include thefts that exceeded a value of $1 million.
The bottom line
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