Cryptocurrency is a digital asset that is mainly used as a transaction medium to secure financial transactions, control the creation of additional assets, and verify any transfers of assets using strong cryptographic technology. It is also known as a form of digital currency or virtual currency. Unlike a central banking system, it is a decentralized control and financial transaction system that operates through a blockchain that is mainly used for financial transactions.
The first decentralized virtual currency developed in 2009 is Bitcoin known as a virtual currency and operates independently without the help of any central bank or administrator. Since then, about 4,000 altcoins of different bitcoin variants have been developed. Bitcoin is considered a peer-to-peer electronic cash system in which users execute transactions directly without intermediaries.
A blockchain is a data file consisting of numerous blocks that keeps a record of all previous bitcoin transactions as well as the creation of new ones. The usual average time between each block is about 10 minutes. The most common use of bitcoin is supported by external software called Bitcoin Wallet. Using this software, you can easily store, receive and manage bitcoin unit transactions. To perform transactions using bitcoin, you need to have an account in any of the bitcoin exchanges around the world and you need to transfer fiat currency to that account. Therefore, the account holder can execute future transactions using these funds. Apart from bitcoin, one of the other sources of cryptocurrency is petro, which is mainly used for oil and mineral reserves.
There are some advantages and disadvantages associated with using digital currency. The main advantages of using virtual currency are the following: –
• Provides a fast layer of transparency: –
Bitcoin usually works with the help of a book called Blockchain that records and monitors every transaction. Once a transaction has been executed and recorded in this book, it is considered static. These transactions can be further verified at any time in the future, thus further ensuring security and privacy in relation to all transactions made through a particular account.
• Fast processing and portable use: –
Billions of dollars of bitcoin can be easily transferred from one location to another without any detection with the help of one memory drive. During the execution of any transactions, the interference of any third party can be eliminated using this bitcoin technology. This will result in an easy and fast transaction without any third party approval,
• Low transaction costs included: –
The transaction costs involved in exchanging these digital currencies are very small, making it more affordable than the actual currency for people around the world. Therefore, the costs of any type of transaction are very lower, which turns out to be a favorable feature for the population whenever they perform any transactions.
• Fighting and eradicating poverty: –
Banking systems and financial institutions often do not provide assistance or assistance to particularly backward classes in rural areas. Bitcoin serves as an alternative in such cases when it provides its robust financial services to anyone who has access to the Internet. It often serves as a support to the poor and oppressed classes, who in most cases are not given a viable alternative.
As and when new or latest technology arrives, there are some negative factors associated with its use, and these are:
• Lack of knowledge and distrustful approach of the population: –
Lack of knowledge about digital currency is more likely that people will become distrustful of its widespread use. Therefore, there are very few business systems that accept these sources of cryptocurrency, which limits business systems that prefer to use virtual currency in everyday transactions.
• Unattended transactions: –
Because transactions made by bitcoin cannot be tracked, this provides room for criminal transactions. In such cases, drug traffickers and scrupulous people are the ones who use such a virtual currency so that their illegal activities cannot be easily detected.
• Volatile and unsafe nature: –
Cryptocurrency is sometimes volatile and often changes on a large scale. Sometimes people make quite a bit of money when the market rates of these virtual currencies skyrocket, and sometimes they also face huge losses when the price falls.
Cryptocurrency is an innovative but amateur concept that can potentially disrupt the entire financial market. It is true that this digital currency has attracted the attention of the world in a short period of time. There are always advantages and disadvantages to any new technology that comes on the market. To make the most of this, it is necessary to look at both sides before making any decisions.