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Advantages and disadvantages of using cryptocurrency

Advantages and disadvantages of using cryptocurrency

A cryptocurrency is a digital or virtual type of currency characterized by cryptography, a network that is distributed across a large number of computers, making it nearly impossible to counterfeit or double spend. Basically, it is a system that allows secure payments online, which are denominated in virtual tokens.

It operates on decentralized networks that operate on blockchain technology system for recording knowledge immeasurably . Which makes it very difficult or impossible to change or cheat the system. This structure allows them to remain outside the control of governments and regulatory authorities.

Cryptocurrencies have become a worldwide phenomenon amidst talk that they are traveling to replace normal currencies in the near future. Adoption of cryptocurrencies continues to gain momentum, partly due to the world's progress toward a cashless society. The fact that some people, nowadays transact via electronic money continues to corroborate the suggestion that cryptocurrencies Can be long term currencies. However given the strong opposition from regulators around the world it will slow down before finding its way into the mainstream.

With the involvement of industrialization and technology digital currencies are gaining a good position over others. One such currency is bitcoin. Many people are accustomed to this well-known terminology. Through cryptocurrencies it is easier to transfer money directly between two parties without the need for a trusted third party such as a bank or other institution for each.

Advantages of Cryptocurrency :

Inflation Protection 

Inflation causes many currencies to decline in their value over time. At the time of its launch, almost every cryptocurrency is issued with a hard and fast amount. ASCII computer file specifying the quantity of any coin; Only 21 million bitcoins have been issued within the planet. Therefore, as demand increases, so will its value which can keep up with the market and prevent inflation in the long run.

  1. Self Governed and Managed :

Governance and maintenance of any currency is also a serious factor for its development. Cryptocurrency transactions are stored on their hardware by the developers/miners, who receive transaction fees as a gift to them for doing so. Since miners have achieved this, they keep transaction records accurate and up-to-date, keeping the cryptocurrency's integrity and records decentralized.

  1. Decentralized :

A major pro of cryptocurrencies is that they are primarily decentralized. Many cryptocurrencies are controlled by the developers using it and who own a significant amount of the coin or by a corporation developing it before releasing it to market. Decentralization helps keep the currency monopoly free and moderated, so no single organization can determine the flow and therefore the value of the coin, which will, in turn, keep it stable and secure, unlike fiat currencies controlled by governments. is the opposite.

  1. Cost effective way of transacting: 

One of the most common uses of cryptocurrencies is sending money across borders. With the help of cryptocurrencies, the transaction fee paid by the user is reduced to negligible or zero amount. It does this by eliminating the need for third parties such as Visa or PayPal to verify transactions. This removes the need to pay any additional transaction fees.

  1. Currency exchanges end smoothly 

Cryptocurrencies can be purchased using a range of currencies such as the US dollar, the European euro, the British unit of measure, the Indian rupee or the Japanese yen. Various cryptocurrency wallets and exchanges help to convert one currency to another by trading in cryptocurrencies, in different wallets, and paying minimal transaction fees.

6. Secure and Private: Privacy and security have always been concerns for cryptocurrencies The blockchain ledger relies on various mathematical puzzles that are difficult to decode  This makes cryptocurrencies safer than ordinary electronic transactions Cryptocurrencies for better security and privacy and they use pseudonyms that are unrelated to any user account or stored data that may be associated with a profile .

  1. Easy Transfer of Funds :

Cryptocurrency has always positioned itself as an optimal solution for transactions Transactions in cryptocurrencies whether international or domestic are lightning fast . This would be because much less time would be required to process the validation Because there are only few hurdles to cross 

Disadvantages of cryptocurrency:

Invalid Transaction :

Since the privacy and security of cryptocurrency transactions is high it is difficult for the government to trace any user by their wallet address or monitor their data Bitcoin has been used in the past as a means of payment exchange of money during many illegal deals . provided such as buying drugs on the dark web  It has also been used by some people to convert their illegally earned money through clean intermediary to hide their source .

  1. Data loss risk: 

The developers wanted to create virtually untraceable ASCII documents, strong hacking defenses, and impenetrable authentication protocols. This would make holding funds in cryptocurrencies safer than physical cash or a bank vault. But if a user loses the private key of his wallet, he will not get it back. The wallet will remain closed and the number of coins inside it. This may result in harm to the user.

  1. Power lies in a few hands: 

Although cryptocurrencies are known for their characteristic of being decentralized, the flow and volume of certain currencies within the market are still controlled by their creators and certain organizations. These holders can manipulate the coin to cause huge fluctuations in its value. Even highly traded coins are prone to these manipulations, such as bitcoin, which doubled in value several times in 2017.

  1. Buying NFTs with other tokens: 

Some cryptocurrencies can only be traded against one or a few fiat currencies. This forces the user to convert these currencies into the most commonly mentioned currencies, such as bitcoin or ethereum first and then through other exchanges, to their desired currency. This may only apply to certain cryptocurrencies. Doing so adds extra transaction fees to the method, which costs unnecessary money.

  1. No refund or cancellation: 

If there is a dispute between the parties concerned, or if someone mistakenly sends funds to the wrong wallet address, the coin may not be received by the sender. This can be used by many people to cheat others out of their money. No refunds since then can easily be made for a transaction whose product or services they never received.

  1. Excessive consumption of energy :

Mining cryptocurrencies requires lot of computational power and electricity input making it extremely energy intensive  The main culprit during this is often bitcoin Mining bitcoins requires advanced computers and plenty of energy .no it on simple computers Ca n'tMajor bitcoin miners are in countries such as China that use coal to produce electricity. This has increased China's carbon footprint tremendously.

  1. Hacked Risk: 

Although cryptocurrencies are very secure, exchanges are not as secure. Most exchanges store users' wallet data to correctly decipher their user IDs. This data is often stolen by hackers, giving them access to multiple accounts.

Once they get access, these hackers can efficiently transfer funds from those accounts. Some exchanges, such as Bitfinex or Mt Gox, have been hacked in the past years, and hundreds of thousands and thousands of US dollars in bitcoin have been stolen. Most exchanges are highly secure nowadays, but there is always the possibility of further hacks. 

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