What Is Cryptocurrency ?
Cryptocurrency refers to the decentralized currency such as litecoin, Dogecoin, Ethereum, Bitcoin, Binance coin etc. It uses cryptography to ensure security and uses blockchain technology to record the transactions. Cryptocurrencies are used to perform online transactions. It is operated on decentralized platforms and is not controlled by the central bank or government like traditional money.
Advantages Of Cryptocurrency
Some of the major benefits or advantages of using cryptocurrency can be pointed out as follows:
1. Faster And Low Transaction Fees
Cryptocurrency avoids third party intermediaries such as banks , financial institutions, credit card companies etc. to transfer funds. Transactions can be performed directly between two parties (fund sender and receiver) by eliminating third parties. So, it is faster way to transfer funds with minimal transaction charges.
2. Decentralized System And Free From Government Control
Another notable benefit of cryptocurrency is that it is not dependent on central bank or government authorities. An individual or group cannot control the operations because it uses blockchain technology to record the transactions. Therefore, it is decentralized and discourages currency's monopoly.
3. Enhanced Safety And Security
Each and every transaction are recorded immutable ledger by using encryption technique that ensures safety and security. So, it makes almost impossible to altered, hack or hack the data.
4. 24/7 Accessibility
Anyone having smartphone, internet and digital wallet can use cryptocurrency. It is more flexible than other types of stock market because transactions can be performed at any time because crypto market never sleeps and accessible at any time.
5. High Returns On Investment
If invested wisely, it generates significant returns. Because of fixed supply, it helps to minimize the effects of inflation. Therefor, it is profitable investing option.
Disadvantages Of Cryptocurrency
The main drawbacks or disadvantages of cryptocurrency can be pointed out as follows:
1. High Price Volatility
One of the major drawbacks of investing in cryptocurrencies is high price volatility. It may not be a suitable option for making stable income because of its price fluctuations.
2. Possibility Of Scam And Security Risk
There exists a chance of wallet hacks, phishing attacks, scams and fake transactions so the investors may lose funds.
3.Not Suitable
Cryptocurrency is not suitable for people who do not want to take risk. It is also difficult to understand blockchain technology so it is complex for beginners.
4. Limited Acceptance
Crypto is not accepted by most businesses and service providers. Therefore, its utility is limited.
Also read:
Difference between blockchain and cryptocurrency
Traditional currency Vs. cryptocurrency
5. Environmental Concerns
It consumes significant electricity to mine cryptocurrencies. So, it raises concern about sustainability.
Pros And Cons Of Cryptocurrency In Short
Pros:
* It is suitable for long-term investors who seek financial freedom
* It ensures greater control and full ownership of funds
* It is transparent in nature
* It protects investors against inflation
* It is cheaper and faster than banking transactions
* It minimizes the risk of government intervention or control
Cons:
* It is risky because of price volatility
* There is a risk of scams and threats such as hacking and loss of private keys
* Cryptocurrency mining consumes more electricity that raises environmental concerns
* It is more riskier for short-term investors
* It may create global financial instability in the future
