What is cryptocurrency?
This is like our usual money currencies like dollars, euros or yens. But instead, this is intangible (which means digital in this case) plus this is an asset an individual can have (just like normal money or currency). A highly secured computerized database will have all the current ledger accounts regarding that specific cryptocurrency so it can control creating additional coins and verify the ownerships of already existing coins.
When the creator creates a specific cryptocurrency at first, it’s considered a centralized currency. In order for it to be decentralized (in other words, to be a proper cryptocurrency that has true value) it has to go through a distributed ledger technology that provides as a public transactional database. Typically in this case, a block chain.
Does people know what Cryptocurrency is?
Text- NO. A lot of people know that something like that exists in this world but most of them don’t actually know what that is. Most of them don’t know how cryptocurrency works. It’s almost two third of the populations according to recent studies. And another study shows that most people who say that they know what cryptocurrency is are male (about 60 percent).
There are lots of kinds of cryptocurrencies and Bitcoin is one of the most famous among them and also the most valuable. There are also Ethereum, Tether and XRP which also holds an increased value among cryptocurrency family.
Why does Bitcoin holds the highest value among all of Cryptocurrency?
Text- One of the main reasons for Bitcoin’s popularity is that it was the first cryptocurrency to be decentralized through a public transactional database. Also, bitcoin has the largest and effective network effect. The second cryptocurrency to be famous around the globe launched after 2 years which was XRP (altcoin). This is the biggest reason for bitcoin to be so famous and valuable than all other cryptocurrencies. Since the fact that bitcoin also happens to be the de facto currency for all cryptocurrencies makes bitcoin even more valuable.
The uses of Cryptocurrency
There are multiple uses of cryptocurrency.
- The first and most important on is that it’s so fast and cost effective. For instance, a recent litecoin (cryptocurrency) transaction that worth almost 100 million US dollars only took less than 3 minutes to be processed and the cost for the transaction was only 0.4 dollars. If this transaction happened through normal channel, the cost would have been so much higher and the process would take at least several days (almost a week probably).
- Another use is that you have complete control over your cryptocurrency. Let’s look at it this way. Imagine you have a personal bank account and you think that you have complete control over that account but that’s not true if your bank account froze and your assets gets frozen. This might happen more often than you think since all it takes for this to happen is if you get accused of financial misconduct or anything similar to that and anyone can get accused of something like that thus there is a probability that your assets could get frozen at some point in your life (not guaranteed ;-)). But since only the individual has access to his or hers cryptocurrencies with their private key, no one can touch that except for the individual. So no one can froze your cryptocurrency in anyway.
- Also you can make private large transactions. Usually when a bank is involved, you will have to explain the source of the money and the reason for the transaction etc. These kinds of steps will most probably delay the process or even create restrictions for your transactions. But none of this would ever happen if you use cryptocurrency to do that said transaction.
- You can also travel around the whole world while spending only cryptocurrency. There are bitcoin ATMs that can convert your bitcoin into tangible currency and also there are travel agencies such as Destinia and CheepAir that accepts bitcoins as payments.
- Finally, you can also buy a Lamborghini car using cryptocurrency since the mother company accepts cryptocurrency as payment 100%. So if you own a lot of Bitcoins and also a Lamborghini fan, then you are in luck.
Disadvantages of Cryptocurrency
All of the above advantages comes at a price. Cryptocurrency is not always better since there are multiple disadvantages it possesses.
- Scalability is one of the biggest concerns regarding cryptocurrency since it grows rapidly. Therefore it is proposed that there must be restrictions for growth of cryptocurrency through lightning networks, sharding (breaking databases into multiple smaller databases) and staking.
- Another major issue is regarding cyber security. Since cryptocurrency is completely digital, it can fall into the hands of hackers if not secured properly. This has happened already and one single transaction loss like that has cost 473 million US dollars. So the security must be tighten more and more since the technology is also improving on a daily basis.
- Even though cryptocurrency holds lots of values, it’s not regulated at all by any central bank or government federation. This must happen fast since then, it would make more confidence among the users because then it feels secured and safe to use.
The future for Cryptocurrency
To be honest, no one can say what the future would hold for cryptocurrency. The reason for this is the ones who supports and believes in cryptocurrency believes that this would be the future of currency and it holds ultimate power over current currencies we have today. On the other hand, critics would only see risks.
Professionals suggest that there are actual applications that cryptocurrency would be the proper solution and this should not be dismissed completely. But on an overall level, we should not put our hopes and faith completely on cryptocurrency but also be skeptical and open minded about it. Despite all of that, there are lots of current uses of cryptocurrency as above mentioned and if you are enthused about being a bit coin user or any other cryptocurrency user, then you should definitely do it and enjoy the benefits.