Cryptocurrency is a digital asset that is used as a means of transaction, primarily with the help of robust cryptographic technology to secure financial transactions, control the creation of additional assets, and verify asset transfers. It is also known as digital currency or virtual currency. Unlike central banking systems, it is a decentralized system of control and financial transactions that operates primarily through the blockchain used for financial transactions.
The first decentralized virtual currency developed in 2009 is known as the Bitcoin virtual currency unit and operates independently without the assistance of a central bank or administrator. Since then, about 4,000 cryptocurrencies of different bitcoin variants have been developed. Bitcoin is considered to be a peer-to-peer electronic cash system where users make transactions directly without intermediaries.
Blockchain is a multi-block data file that stores records of all previous bitcoin transactions and even creates new ones. The average normal 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, the transaction of bitcoin units can be easily saved, received and managed. To make transactions through bitcoin, you must have any bitcoin exchange account around the world and you must transfer a trusted currency to that account. The account holder can make future transactions using these funds. In addition to bitcoin, the other source of cryptocurrency is petroleum, which is mainly used for oil and mineral reserves.
There are some pros and cons to the use of digital currency. The main advantages of using virtual currency are: –
• Provides a quick layer of transparency: –
Bitcoin usually works with the help of a book called Blockchain which records and controls all transactions. This is called static when a transaction is made and registered in this library. These transactions can be verified at any time in the future and therefore also ensures the security and privacy of 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 with the help of a single memory-free unit without any detection. While you are conducting any type of transaction, third party involvement can be eliminated by using this bitcoin technology. This will result in quick and easy operation without the permission of a third party,
• Low transaction costs: –
The transaction costs caused by the exchange of these digital currencies are much lower, which makes them cheaper than the real currency for the world’s population. Therefore, the cost of any type of transaction made is very low, which is an advantageous feature of the population in all those who are making a transaction.
• Fights and eradicates poverty: –
Often banking systems and financial institutions do not provide support or assistance especially to the backward classes in rural areas. Bitcoin serves as an alternative in cases where it extends its robust financial services to anyone with Internet access. It often provides support to the poor and oppressed classes, who in most cases are not given viable alternatives.
As new technology arrives, some of the negative factors associated with its use are: –
• Lack of knowledge and distrust of the population: –
Due to the lack of knowledge about digital currency, people are distrustful of its widespread use. Therefore, the number of business systems that support these cryptocurrency sources is very small, so they limit the business systems that prefer to use virtual currency in their daily transactions.
• Non-facilitating transactions: –
Since transactions made by Bitcoin cannot be found, it provides room for criminal transactions. In these cases, it is drug traffickers and strict people who use this virtual currency to prevent illegal activities from being easily detected.
• volatile nature and uncertainty: –
It is sometimes variable in cryptocurrencies and continues to change frequently on a large scale. Sometimes people make quite a bit of money when the market rates for these virtual currencies increase and sometimes they suffer a huge loss when the price falls.
Cryptocurrency is an innovative but amateur concept that can disrupt the entire financial market. It is true that this digital currency has gained the attention of the world in a short time. There are always advantages and disadvantages to all the new technologies emerging in the market. In order to make the best use of it, both sides must be examined before decisions can be made.