Cryptocurrency is a digital asset used primarily as a transaction medium to secure financial transactions, control the creation of additional assets and verify any asset transfer with the help of a firm. cryptographic technology. It is also known as a form of digital currency or virtual currency. Unlike central banking systems, it is a decentralized control and financial transaction system that works through a blockchain that is used primarily for financial transactions.
The first decentralized virtual currency developed in 2009 was Bitcoin which was known as a virtual unit of money and it worked independently without the help of any central bank or administrator. Since then, about 4000 altcoins different variants of bitcoin have been developed. Bitcoin is considered a peer-to-peer electronic cash system where users directly make transactions without intermediates.
Blockchain is a data file composed of multiple blocks that store records of all past bitcoin transactions and also create new ones. The average average time between each block is about 10 minutes. The most frequent use of bitcoin, is supported by an external software called Bitcoin wallet. By using this software, one can easily store, receive and manage transactions in bitcoin units. In order to make transactions using bitcoin, one must have an account on any one of the bitcoin exchanges around the world and must transfer the fiat currency to that account. Thus the account holder can make future transactions by using these funds. In addition to bitcoin, some of the other sources of cryptocurrency are petro which is commonly used for oil and mineral reserves.
There are some pros and cons associated with using digital currency. The main benefits of using a virtual currency are as follows:-
• Provides quick transparency layer:-
Bitcoin usually operates with the help of a ledger called Blockchain that records and monitors every transaction. Once a transaction is made and recorded in this ledger it is treated as static. These transactions can be further verified at any time in the future and therefore in addition to this, it also ensures security and privacy regarding all transactions made through a particular account.
• Fast Processing and Portable Usage:-
Billions of dollars in bitcoin can be easily transferred from one location to another without any detection with the help of a memory drive. While performing any type of transactions, the involvement of any third party can be eliminated by using this bitcoin technology. This will result in quick and fast transaction without permission from a third party,
• Low transaction costs involved:-
The transaction costs associated with exchanging these digital currencies are very small making them cheaper than real money for the population around the world. Therefore, the cost of any kind of transaction being done less becomes a beneficial factor for the population every time they do any transactions.
• Fighting and eradicating poverty:-
Often banking systems and financial institutions do not provide help or assistance especially to the backward classes in rural areas. Bitcoin serves as an alternative in such cases where it extends robust financial services to anyone with internet access. It has always served as support for the poor and oppressed classes who in most cases have not been given any viable alternative.
When a new or latest technology arrives, there are some negative factors that are also associated with using it which are as follows:-
• Lack of knowledge and distrust of the population:-
Due to the lack of knowledge about digital currency people are more likely to become distrustful of its widespread use. Therefore, there are a small number of business systems that accept these cryptocurrency sources thus limiting the business systems that want to use virtual money in their day-to-day transactions.
• Untraceable transactions:-
Because, transactions made with bitcoin cannot be tracked it provides a room for criminal transactions. In such cases, drug dealers and vigilant people are the ones who use such virtual money so that their illegal activities are not easily detected.
• Characteristic of mobility and insecurity:-
Cryptocurrency sometimes evaporates quickly and is constantly changing on a large scale. Sometimes people make a lot of money when the market prices of these virtual currencies go up and sometimes they also face a lot of losses when the price crashes.
Cryptocurrency is a relatively new but innovative concept that can disrupt the entire financial market. It is true that this digital currency has caught the world’s attention in a short period of time. There are always benefits and disadvantages to every new technology that emerges on the market. To make the most of it, one should look at both sides before making any decisions.