With the aid of a powerful cryptographic technology, cryptocurrency is a digital asset that is primarily used as a medium of exchange to secure financial transactions, regulate the creation of new assets, and verify any asset transfers. The term “virtual currency” or “digital currency” are also used to describe it. In contrast to central banking systems, it is a decentralized control and financial transaction system that operates through a blockchain that is primarily used for financial transactions.
As the first decentralized virtual currency to be created in 2009, Bitcoin operates independently without the help of a central bank or administrator. Since then, roughly 4000 different bitcoin alternatives have been created. In a peer-to-peer electronic cash system like bitcoin, transactions are carried out directly between users without the use of a middleman.
The creation of new bitcoin transactions is also recorded in a database called the blockchain, which is made up of numerous blocks. There are typically about 10 minutes between each block. A third-party program called Bitcoin wallet supports the most popular way to use bitcoin. The storage, receipt, and management of bitcoin transaction can all be done with ease by using this software. One must have a bitcoin exchange account and deposit fiat money into it in order to conduct transactions using bitcoin. These accounts can be created at any bitcoin exchange worldwide. The account holder can use these funds to complete additional transactions in the future. Petro, which is primarily used for oil and mineral reserves, is one of the alternative sources of cryptocurrency besides bitcoin.
The use of digital currency has some advantages and disadvantages. The main benefits of using a virtual currency are as follows:-
• Provides a quick transparency layer:-
A ledger called Blockchain, which records and keeps track of each transaction, is typically used by Bitcoin to operate. A transaction is regarded as static once it is completed and recorded in this ledger. Additionally, it guarantees security and privacy for all transactions made through a specific account because these transactions can be further verified at any time in the future.
• Fast Processing and Portable Usage:-
With the aid of a single memory drive, it is simple to move billions of dollars’ worth of bitcoin undetectedly from one place to another. By utilizing this bitcoin technology, any third party involvement during any type of transaction can be eliminated. This will result in an easy and rapid transaction without any approval from a third party,
• Low transaction costs involved:-
These digital currencies have very low transaction costs, making them more accessible to the global populace than traditional currencies. As a result, the cost of any transaction made is very low, which proves to be a beneficial aspect for the population whenever they are carrying out any transactions.
• Combats & eradicates poverty:-
The banking systems and financial institutions frequently don’t offer support or assistance, especially to underprivileged groups in rural areas. In these situations, Bitcoin serves as an alternative by making its robust financial services available to anyone with internet access. It frequently acts as a source of support for the oppressed and underprivileged classes, who typically lack any real alternatives.
As and when a new or latest technology arrives, there are some negative factors also associated with its usage which are as follows:-
• Lack of knowledge and mistrustful approach of the population:-
People are more likely to mistrust digital currency’s widespread use because they are less knowledgeable about it. Due to the small number of business systems that accept these cryptocurrency sources, the number of business systems that prefer to use virtual currency in their daily transactions is constrained.
• Non-traceable transactions:-
Since bitcoin transactions cannot be tracked, they allow for illicit activity. In these situations, scrupulous people and drug dealers are the ones who use such virtual currency so that their illegal activities are not easily discovered.
• Volatile and Uncertainty nature:-
The value of cryptocurrencies can fluctuate and change dramatically and frequently. People can occasionally make a sizeable profit when the market value of these virtual currencies soars, but they can also suffer significant losses when the price plummets.
Cryptocurrency is a novel but unproven idea that has the potential to upend the entire financial system. It is true that in a short period of time, this digital currency has captured the attention of the entire world. Every new technology that enters the market has both advantages and disadvantages. Before making any decisions, one must consider both sides in order to get the most out of it.