A digital currency in which the transactions are verified and the records are maintained by a decentralized system using cryptography is known as Crypto Currency. It is the digital or virtual kind of currency marked by cryptography, a network distributed across a large number of computers, making it somewhat impossible to counterfeit. It is the system that allows for secure online payments which are denominated in virtual tokens.
Crypto currency works on decentralized networks. These networks operate on block chain technology. Block chain technology is the technology that is shared, and it is an immutable ledger which facilitates the process of recording the transactions and tracks assets in a business network. The structure allows them to exist outside the control of governments.
Crypto currencies have become a worldwide phenomenon. The adoption of crypto currencies continues to understand the momentum partially due to the progression of the world toward a cashless society. Many people transact through electronic money, which continues to affirm suggestions that crypto Currencies could be the currencies of the long term.
However, it will happen eventually. With the involvement of technology, digital currencies are gaining a good position over others. One such type of currency is Bitcoin. Many people make use of Crypto currency for transferring funds directly between two parties. This can be done without the requirement of a trusted third party like every bank or any other type of institution.
Here are a few advantages and several disadvantages for you to decide whether Crypto Currency is a good investment for you or no.
Inflation has caused many currencies to urge their values to decline with time. Every Crypto currency is released with a formidable amount at the time of its launch. There are 21 million Bitcoins released on the planet. The ASCII computer file is the one that specifies the quantity of any coin. It is a known fact that as the demand increases, the value will increase. This value might maintain with the market and prevent inflation in the long run.
The two most severe factors for any currency are its government and money. The developers store all crypto currency transactions very safely on their hardware. They also get a transaction fee as a gift for doing so. The miners keep the transaction records accurate and up-to-date. They also keep the integrity of the Crypto currency and also record the decentralized.
In the blockchain, decentralization transfers control and decision-making from a centralized entity to a distributed network. To decentralize the national government means to disperse something from an area of concentration. In contrast, centralization, on the other hand, represents the process of concentrating power and authority in the hands of senior management.
Crypto currencies are mainly decentralized. Many crypto currencies are controlled by the developers who use them. They are also used by people with a significant amount of coin or for cash to develop before it is released in the market. Decentralization helps keep the currency monopoly free. Thus, no organization can determine the flow. Therefore, the coin's worth will keep it stable and secure, unlike flat currencies controlled by the government.
The most important use of Crypto currency is to send money across borders. With the help of Crypto currency, the transaction fees that the user is paying are reduced to a great extent. It also eliminates the third parties like VISA.
The privacy and the security of crypto currency transactions are high; it is tough for the government body to trace down any user by their wallet address or keep the tabs on their data. Bitcoin has been used for many illegal transactions in the past. It has been used by some people for converting their illicitly acquired money to hide its source.
The developers did everything in their hand to make the virtually untraceable ASCII documents. They also developed strong hacking defenses. The major drawback is that if any user loses the private key to their wallet, there is no getting back and they cannot retrieve the lost data back. Thus, the wallet will remain locked away along with a number of coins inside it.
Crypto currencies are very well known for their feature of being decentralized. However, the flow and amount of some currencies within the market are still controlled by their creators and some organizations. These holders can also manipulate the coin for enormous swings in its price.
Some crypto currencies out there can be traded in one or some flat currencies under crypto currency regulation. It also forces the users to convert these currencies into one all told the most currencies such as Ethereum and Bitcoin and through other exchanges to their desired currency. By following this, the extra transaction fees are added within the method which costs the user unnecessary money.
If someone mistakenly sends funds to a wrong wallet address or if there is a dispute between concerned parties, the coin cannot be retrieved by the sender. It also might be utilized by many people to cheat others out of their money. There are no refunds and the possibility of a person being cheated for a transaction whose product or services they did not receive are very high.
Mining crypto currencies require plenty of computational power and electricity. Thus, it makes it highly energy-intensive. Bitcoin mining is the one that requires advanced computers and plenty of energy. One simply cannot do it on ordinary computers. The major bitcoin miners are in the countries like China and they use coal to produce electricity, and this has increased China’s carbon footprint.
Crypto currencies are very secure. However, exchanges do not seem to be that secure and hence they are vulnerable to hacks.
Disclaimer- Lakshmishree Investments & Securities Pvt Ltd does not endorse trade and investments in Crypto Currencies or block chain. This article is merely for the purpose of information and education.
