Cryptocurrency may not be the latest invention but it is becoming more and more popular with each passing day. This is because of its various advantages over traditional currency. Even though it has been around for more than not many people don’t know about it. Most people who know about it are not using it as they are not familiar with how they work. But they are very curious nonetheless. This article is all about helping you understand what exactly cryptocurrency is and how it is better in certain situations compared to the traditional currency.
Let’s dive into the topic.
What is Cryptocurrency?
When you hear the word cryptocurrency then you have to understand that this is not some physical currency. This is a virtual or digital form of currency that is stored in ledgers in databases that are operated by computers. Since it is a virtual currency you cannot counterfeit it. Once you make a transaction your coins (which is your virtual currency) will be deducted and the transaction cannot be reversed. This means that a person cannot spend the same coins again.
Usually, the traditional banking systems are centralized but cryptocurrency is most of the time opposite of that. After the cryptocurrency is minted distributed ledgers are used to keep track of it. It uses blockchain technology to keep records of transactions. Bitcoin is the first cryptocurrency and it was invented by a group of anonymous people going by the name Satoshi Nakamoto. It is the most popular cryptocurrency in the world. Since then more than 6000 other cryptocurrencies have been invented.
Let’s look at the advantages of using a cryptocurrency.
Data privacy
This is one of the most popular things that people are concerned about in the current generation. Your data is not kept confidential from everyone. If you have an account in the bank then it has access to all of your information. It can get any type of data at any time they want without informing you. But this is not the case when it comes to cryptocurrency. When you have a certain amount of coins in your wallet you will not be under the authority of anyone. No one will be able to view your personal data as the system is completely decentralized. You have to push in order to make a transaction. So cryptocurrency gives you the ability to choose the amount of information you want to share for making a transaction apart from a few basic details.
Impeccable security
Since it is a virtual form of currency many people would be wondering what if some hacker steals the money from your wallet. This concern is a genuine one but there is no need to worry as cryptocurrency is highly secure. As mentioned earlier it uses blockchain technology to keep track of all the transactions. So every transaction will be monitored all the time. This means that every time a transaction is made all the systems will be updated. It is impossible to hack because the hacker has to hack all the systems across the globe to steal your cryptocurrency. Above all the currency is encrypted. The word crypto means concealed or secret this will help understand the very nature of the currency. Cryptocurrency payments cannot be reversed so there is no chance of fraudsters taking advantage of transactions.
Flexibility
As mentioned earlier there are thousands of cryptocurrencies in the market today. Many of them do not last long. But there are quite a few that are really great. The best part about this type of currency is its adaptability. Not only that but there are some cryptocurrencies that are created for specific purposes. For instance, you have coins that will help you conceal your identity on the blockchain. The type of cryptocurrencies that are becoming popular in recent times is stablecoins. You may not know this but the value of cryptocurrencies is volatile. This means that the value of the cryptocurrency you are using may drop or increase. Tether USDT is the first company to create stablecoins. These were created to minimize volatility. So if you want to buy cryptocurrency that has low volatility then buy USDT.
Effortless international transactions
Since cryptocurrency is a digital currency the traditional banking transaction rules do not apply to it. If you ever made an international transaction you know how hard it is. You have to comply with all the rules that are imposed by the country. If you cannot do it through your bank you have to find other mediums. But you will be shocked to see how easy it is to make transactions using cryptocurrency. This is possible because of the peer-to-peer networking it uses. You will literally not find any difficulty in making transactions. The best about these transactions is that they are instant. One does not have to wait for weeks to know if the transaction is complete which is sometimes the case with credit cards.
Complete control
Take any system that involves money, you will find that your account is basically owned by someone else. This is also the case with electronic cash systems like PayPal. Every financial institution that you are a customer of has control over your money. They can freeze your account at any point in time without informing you if they feel like you have done something wrong. If you use cryptocurrency you will have complete control over your wallet. Only you will have the access to the public key and private key that reveal your cryptocurrency address. The only way someone can know this is if you reveal it yourself. So you don’t have to worry about someone having control over your account if you use cryptocurrency.
Low transaction fees
There is no need to tell you about the amount of money you lose in the form transaction fee. For every kind of transaction whether transferring money or writing checks, you will be charged a transaction fee. If you are someone who makes a large number of transactions every month then you will be losing a good chunk of money through transaction fees. But if you use cryptocurrency then you don’t have to worry about this. Generally, there is no transaction fee for cryptocurrency. You will only have to pay transaction fees if you hire a third-party to manage your wallet. Even if you pay a transaction fee you will be paying far less than what you pay for traditional transactions.
Conclusion
These are some of the advantages of using cryptocurrency. If you are a businessman then it is very easy for you to make international trades using cryptocurrency. Since it is a digital form of currency it is accessible to everyone who has a smartphone with an internet connection. You don’t have to worry about security as it provides protection through strong encryption. It is better to buy stablecoins as they are less volatile than other cryptocurrencies.