Is Cryptocurrency a Boon with New Opportunities or Bane with Threat to Economy?

A Cryptocurrency can be described as a digital currency that has been developed and managed through advanced encryption strategies known as cryptography. Cryptocurrency made the jump from being an academic idea to virtual reality with the development of Bitcoin in 2009. Cryptocurrency, together with blockchain technology, has attained great heights in the last few years. Currently, more than 2,000 cryptocurrencies are being exchanged.

Features of Cryptocurrency

• Cryptocurrency makes Transactions Quicker

Investing resources into bonds or equities can make it difficult to access the funds when there is a need. With cryptocurrencies, individuals can transfer money quickly across borders (cross-border transactions) to family, friends, or business associates.

• Cryptocurrencies are Speculative

Although cryptocurrencies may seem like an extraordinary investment opportunity, there are few concerns before entering this unstable market. The greatest concerns experts have claimed that cryptocurrencies are speculative in the marketplace. Cryptocurrencies rely on market forces, which can be a big risk for certain investors.

• No Protection against Investment

Investing resources in a global cryptocurrency can be a two-edged sword. From one point of view, the investor can make consistent transfers and can protect themselves from huge fees. Then again, there is no protection from national security or government banking regulations.

• Cryptocurrencies and Blockchain offer Streamlined Payment Options

Cryptocurrencies encourage direct transfer, bypassing the third party that frequently charges for handling payments from the bank, PayPal, Mastercard, or another payment technique. For entrepreneurs, cryptocurrency can offer streamlined payment options to sellers and supply chain associates.

Advantages of Digital Currencies

• Digital Currencies have no regulatory authority yet are managed by all network members. These currencies are created, processed, and transferred without the help of intermediaries, which includes banks or other financial institutions. Digital currencies are open-source, and their source code is known to the whole world.
• Digital currencies encourage financial integration while giving a reduction in costs for international and local transactions. Quick P2P transfers without fee or minimum charges are presently available to everybody.
• They have the potential for global scalability. In several countries, Bitcoin and different coins are as of now acknowledged along with fiat cash at terminals and stores. Moreover, the number of organizations with a “cryptocurrencies acknowledged here” sign is constantly developing.
• Besides, digital currencies have a giant potential for development. The inflow of investment into the second half of 2017 gave way for a maximum increase in the value of cryptocurrencies.
• Digital currency features enhanced transaction by using blockchain technology and cryptography to make a private, secure environment. Exchanges, transfers, and different activities can be performed if the agreement is reached among all hubs in the network.

Few Risks of Digital Currencies

• There is a danger of hacking attacks, including the installation of malware on the PCs and smartphones of ordinary clients. Moreover, potential hacks could incorporate viruses, phishing, ransomware, or link replacement. Some of the major cyber-attacks happen regularly, fundamentally against cryptocurrency wallets with especially large sums or crypto exchange accounts.
• One would anticipate that the model of free decentralization should be extremely appealing to many financial clients, such as cryptocurrencies. Some of them gave rise to unpleasant outcomes. These include the difficulty of demonstrating the fact that cryptocurrency assets have been stolen, because of the absence of legal regulations.
• There have been various cases of closure of crypto exchanges and bankruptcy in the early history of the digital currency market. A recent report verified that during the most recent years, the closure of crypto exchanges reached 48 percent.
• Further, the volatility of the market, to some degree, has the impact of manipulative news stories and significant digital money owners who play with the costs of cryptocurrencies.
• Moreover, when a bank goes bankrupt, it, as a rule, has a specific reserve fund. People who suffer as a result of this will recover their assets in a specific order, or possibly some of them. But, when a crypto exchange went bankrupt and closes, clients do not get an opportunity to recover the assets from their accounts, and there is nothing that can be done. There is no legal authority or law to appeal.
• Regardless of its downsides, digital money could change the current economic situation. However, existing blockchain platforms are restricted by the limits of their environments. Besides, they do not associate with one another, consequently losing the potential for global adaptability.

Wrap up

The rise of Bitcoin has started a discussion about its future and that of different cryptocurrencies. Regardless of Bitcoin’s ongoing issues, its success from the 2009 launch has initiated the creation of several new cryptocurrencies. While that plausibility looks remote, there is little uncertainty that Bitcoin’s success or disappointment in managing the difficulties it faces may decide the fortunes of several other cryptocurrencies in the forthcoming years.