With its meteoric rise in popularity, it’s more than likely you’ve heard words like ‘cryptocurrency’ or ‘bitcoin’ from the mouth of your friends or read about this new technology online. If what you’ve heard has intrigued you and piqued your curiosity, we’re here to help explain it all.
In a nutshell, cryptocurrency is digital currency. Unlike a traditional currency which – even when buying something online – draws its value from a physical equivalent, cryptocurrency only exists on the internet. Cryptocurrency can be exchanged for goods and services online at participating stores. Sometimes, companies come out with their kind of cryptocurrency, which you can then use to avail of the services being provided by that specific company.
However, cryptocurrencies are not homogenous. As of 2021, there are nearly 8,000 distinct cryptocurrencies on the market, with Bitcoin being the most highly-valued and popular. Another currency is ‘bitshares.’ If you are thinking,what is bitshares? It is a type of cryptocurrency, and is also a part of the Microsoft Azure blockchain. It was created in 2014.
Many websites – called digital exchanges – offer users the ability to buy, sell and trade cryptocurrencies. But like any financial partner, be sure that whatever company you’re buying it from is reliable, protected, and trustworthy. Before buying cryptocurrency from a company, you need to search about it and educate yourself on the topic. You should have ample knowledge in this regard before you invest in a cryptocurrency or buy from a new exchange. If you don’t, then you may be more vulnerable to things like hacks or scams.
When talking about cryptocurrency, there are certain advantages and disadvantages you need to know.
The pros of cryptocurrency
- Cryptocurrency has relatively low barriers to entry, in the sense that all you need is an internet connection, and using that, you can create your digital wallet. This digital wallet can help you store whatever cryptocurrency it is that you invest in.
- When it comes to cryptocurrency, you could be in a different part of the world, and you can still transfer it without any difficulty. This all is made easy because cryptocurrency is not under the control of any central bank.
- If you are careful, your transactions will be secured. No one could access your digital wallet and spend that money unless you were hacked. So, you need to educate yourself about the things you can do to protect yourself.
- Your details and personal information is completely secured and protected.
- You can easily purchase cryptocurrency using any traditional currency like the US dollar etc. You can also exchange one currency into the other by trading in the cryptocurrency at a digital exchange.
- Easily one of its most significant advantages is that it is decentralized, this keeps it free from the risk of monopolisation and is in check, so it is kept secure and stable.
The cons of cryptocurrency
- You cannot reverse the transactions. Once your payment is made, you cannot undo it. The only way to earn your money back is if the other person cooperates with you.
- If a user forgets or loses the key to their digital wallet, they cannot get it back. The wallet cannot be opened and will remain there with the coins inside it. This will lead to a significant financial loss to the owner.
- Not many websites on the internet accept payments through these digital currencies; only some do.