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What is Cryptocurrency

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#finance #financialtips #financing #goals
Published
10/29/2021

Cryptocurrencies are a digital currency that is secured by cryptography and the demand for cryptocurrency is increasing day by day as it is impossible to double-spend or counterfeit it. The decentralized network of cryptocurrency is based on blockchain which is an organisational method that ensures the integrity of data transactions and is an important component of many cryptocurrencies, it is not issued by a central authority and is also very safe. It is a form of asset in digital form which is based on a network and that network is distributed across a huge number of computers.

The people who don't understand cryptocurrency criticize it because of its illegal exchange rate volatility and activities but the people who understand it praise it for its many benefits. Cryptocurrency has both advantages and disadvantages so let's have a look at them, in brief, to understand the word cryptocurrency better.

Advantages and disadvantages of cryptocurrency

First, let's, in brief, look at the advantages of cryptocurrency.

  1. Asset transfer- the blockchain of the cryptocurrency ecosystem can be used for a specialist mode of transfer also it is easy to add third party approvals. It also minimises the expenses and time that is involved in making asset transfers.
  2. Confidential transaction- when you transfer an amount in cash or through your credit card or debit card all your transaction history becomes a document for your bank, whenever you make a transaction it is recorded in the bank but when you make a transaction with cryptocurrency then it makes a unique exchange that remains only between two parties.
  3. Easy international trade- when you make international transactions with cryptocurrency then you don't have to face complications of currency exchange fluctuations which makes the transactions easy and less expensive.
  4. Security- cryptocurrency transactions are always made under security so there is no chance of fraud as a specific agreement is made between the buyer and the seller regarding returns and refunds.

Now we are aware of the advantages of cryptocurrency and by that, we understand why this medium of transaction is growing so fast but it also has some disadvantages so let's have a look at them too.

  1. Cyber security issues- the drawback of being a digital technology is falling into the hand of hackers, even after having two-party transaction hackers can still hack your account and you can lose your money.
  2. Rules and regulations- when you make a normal transaction in cash or with your debit card or credit card it is recorded in the bank and there are only a few, rules and regulations, but when you make transactions with cryptocurrencies then you have to make an agreement that can contain a lot of rules and regulations.

Conclusion

Cryptocurrencies are the system that allows secure online transaction domains in virtual tokens. There are different types of cryptocurrencies that you can purchase with the help of a crypto exchange and cryptocurrency trading platform that you can easily find on the internet. There are many advantages and disadvantages of cryptocurrency and some of them are mentioned above, it can be a very good medium of transaction if you have proper knowledge about it.

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