Cryptocurrency is a virtual or digital asset used as the medium of exchange which uses cryptography to secure financial transactions, to verify the transfer of assets and to control the creation of additional units. The strong cryptography that is used in cryptocurrency makes it hard for anyone to counterfeit it. Others take cryptocurrency as a digital, virtual or alternative currency which is used in different online activities like trading. Furthermore, it uses a decentralized control in as much as it is widely known for its organic nature which means that it is not controlled by any central authority like the government. This feature makes cryptocurrency different from the currencies in different parts of the world.
Cryptocurrency Broken Down
Bitcoin is the first decentralized cryptocurrency which was released in 2009 as an open source software by an unknown person under the pseudonym Satoshi Nakamoto. Since then, over 4,000 alternative coins were developed. Up to date, a total of 17 million bitcoins with a total value of $140 billion is circulating in the market. It is considered the most popular and most widely used cryptocurrency that ever existed despite the development of other cryptocurrencies.
Pros of Cryptocurrency
- Transferring of funds between and among parties is made easier with cryptocurrency.
- It is secured and legal.
- It charges minimal transfer fee only.
Furthermore, cryptocurrency uses blockchain technology in storing online ledger for every single transaction. With these, traders are exposed to minimal or limited risk only, in as much as it is almost impossible to forge any transaction history.
Cons of Cryptocurrency
- The cryptocurrency balance can be wiped out easily when the computer crashes and there is no backup copy available.
- Fluctuations can happen in just a split second.
- Cryptocurrency is a great host of activities that are nefarious which include tax evasion and launder.
- It can be eliminated at any time or simply, a short-lived asset because of its nature.
- It can undergo surges and value collapses any time.
The legal status of cryptocurrency varies from one country to another. Other countries have totally banned the use of cryptocurrency, while other openly accepted it. There are also countries which allow the use of cryptocurrency except when buying goods and commodities.
Although it promises security, cryptocurrencies are still prone to hacking. Bitcoin, for example, has been hacked for a number of times. However, it is expected that the use of cryptocurrencies will not end sooner, instead, its popularity will continue to grow for both traders and non-traders. The good thing about it is that it is not a problem to where you can stock unlike any other asset and it is not under any central organization.