Fascination with cryptocurrency has become the new norm. Cryptocurrencies are trendy with online users who consider it a way to access money from outside the usual financial systems of the non-digital world. Cryptocurrency is particularly popular with people who want to challenge the establishment by utilizing this decentralized ledger without influence by third parties.
Beginning with Bitcoin in 2009, Cryptocurrency has become a way for people to create financial systems parallel to the traditional one, which is extremely regulated and standardized. From the start, a major goal for Bitcoin and Cryptocurrency as a whole was to build a decentralized system among all its participants so that citizens are free to trade with each other without any intermediaries. Major Cryptocurrencies like Bitcoin do not depend on any government and they also do not add any exchange fees, money changing fees or other transaction fees.
“Well, this all sounds great!” you might be thinking to yourself. However, your excitement might be short-lived if you are not careful with how you invest in Cryptocurrency. In this blog post, we will look at how Cryptocurrency works, what the major advantages are, and why you should be careful with it.
How does it work? What are the main advantages?
One main difference between Cryptocurrency and other currencies like US Dollars, Pound Sterling or Euros is that users, not governments, have made it. Unlike traditional currencies, Cryptocurrency cannot be subject to traditional inflation, as it is based on a collaborative creation model. (Though its value can be subject to wild fluctuation based on speculation and unregulated markets). The production of cryptocurrencies is limited by values that are previously defined in the public domain. Advocates of Cryptocurrency argue that the security these currencies provide is based entirely on computer protocols, protecting users from piracy, possible theft and/or other frauds.
But. . .
All these advantages of Cryptocurrency sound great. Right?
Not necessarily. A few major issues with Cryptocurrency suggest that you should be very careful when dealing with these digital currencies. While Cryptocurrency is designed to build a secure, collaborative system, there have been cases of theft and piracy. Cybercriminals use cryptocurrencies’ feature of making near-anonymous payments to perform untraceable transactions, asking for ransom or paying for illegal activities.
The Cryptocurrency market is evolving and improving rapidly. It is crucial to be aware of the issues and participate sensibly and carefully.