We live in a rapidly transforming and constantly evolving world. Today, several hundred options are available for making transactions, trading, saving, and exchanging money. Over the past few years, the definition of money has altered significantly. Money is no longer only a physical object used to buy and sell goods. The introduction of online payments and e-wallets has, indeed, reduced the need for paper money to a certain extent.
Not only online payments but digital currencies have also been a game-changer. Cryptocurrency, the most valid and well-known example of digital currency, is gaining traction towards becoming the new form of digital money.
A few years ago, most people assumed cryptocurrency to be similar to a bank without physical appearance. However, over time, crypto’s actual value, usage, and meaning have come forward, leaving people amazed at its innovation.
Every newsletter, website, news channel, and other news sources now have at least one section or segment devoted to cryptocurrency. But what is it? Let’s dig deeper and understand its functions and why it has become increasingly important?
What is cryptocurrency?
Cryptocurrency is a digital payment system based on blockchain technology. It adopts a decentralized mode of payment, meaning it has no involvement of any intermediary such as banks or any other monetary authorities. It is an entirely independent, peer-to-peer digital money-handling technology that allows you to send and receive money anywhere in the world.
It is a digital database run via cryptography. Cryptocurrency originally got its name from encryption. It uses advanced coding to transmit and store data between public ledgers and wallets. Such high-end encryption ensures security and safety. Undoubtedly, this might seem a bit puzzling to grasp. Fortunately, you can avail yourself of online learning platforms to develop a thorough understanding of cryptocurrency. You can opt for an online course in cryptocurrency to understand its complexities and functions. With the rise in online education platforms, taking an online course might be more convenient, hassle-free, and suitable.
Furthermore, there are several variations in cryptocurrencies called coins. You might have heard of the most famous ones; Bitcoin and Ethereum. However, there are more than 3,000 cryptocurrencies currently present in the world. Some lack popularity, while some have a loyal stream of dedicated investors and funders backing them.
One significant thing to note about cryptocurrency is that it is a primarily anonymous system. However, every transaction can be traced and tracked through cryptography. The aim is to use a highly advanced and complex encryption system to keep its members protected from fraud.
Why is cryptocurrency vital?
There are several reasons behind the importance of this emerging asset, some of which we have listed below.
As mentioned above, cryptocurrencies use an intricate and high-end encryption system to steer clear of any fraudulent activity. Bitcoin, for example, undergoes a process called mining, where all bitcoin information goes through mathematical checks and verifications through coding before proceeding further.
Additionally, once a cryptocurrency transaction has proceeded, you or the system cannot reverse it, like with credit and debit cards. There is no charge-back system in cryptocurrencies, and this considerably decreases the chances of fraud and scams. However, if someone sells you a defective product or service, you cannot claim a refund. Furthermore, even though the network contains all of your information, it displays only the amount and your address and the receiver’s address during a transaction. Therefore, privacy-conscious individuals do not have to worry about their private information getting out when dealing with cryptocurrencies.
The absence of an intermediary means no government jurisdiction, no monetary authority control, and a meager cost. You are free to control your crypto account as you wish. You do not have to give proof before making a transaction, the way you have to present your bank statement for various business purposes. Since blockchain has no entity, transaction fees are also meager.
The ultimate aim is to make cryptocurrency similar to cash but in an electronic form. For instance, if you wish to send money to a friend, get their crypto address and transfer with ease. You can conveniently avoid the hassle of a bank or exchange rates for international transactions.
Another remarkable benefit of this emerging asset is the convenience it provides in terms of transfer. You can use smart contracts to transfer ownership of assets with the utilization of crypto as a tool. The buyer and the seller both pay using mutually accepted cryptocurrencies, and the blockchain ecosystem facilitates the transfer. Currently, the most famous cryptocurrency used to buy and sell properties and vehicles is bitcoin.
Now the question is, should you opt for cryptocurrency? The answer lies between your understanding and ability to invest in a volatile market. Undoubtedly, cryptocurrencies are increasing in value by the minute. Large organizations are taking the plunge and investing in the existing cryptocurrencies or developing new ones.
Cryptocurrency has only been in the market for a decade. It is still a relatively new technology that requires further research and development. However, by looking at its ability to reshape the global financial market entirely, it would not be wrong to say that crypto is the future.