Cryptocurrency is digital money which is in the form of tokens or coins. It is a digital asset designed to work as a medium of exchange. Cryptocurrency does not exist in a physical form, so it is not issued by the Central Authority. The ownership of individual coins is recorded and stored in a ledger, existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. Cryptocurrency uses decentralized control and each works through distributed ledger technology, which is a blockchain that serves as a public financial transaction database.
Bitcoin was the first decentralized cryptocurrency released in 2009. After that other cryptocurrencies had been created. Those tokens and cryptocurrencies which are not bitcoins are called alternative coins or altcoins.
How To Buy Cryptocurrency
To buy cryptocurrencies, you need a “wallet“. It is an online app that can hold your currency. Generally, you have to create an account for an exchange, and then you can transfer real money to buy cryptocurrencies.
Coinbase is one popular cryptocurrency trading exchange where you can create both a wallet and buy and sell Bitcoin and other cryptocurrencies. Also, many online brokers offer cryptocurrencies, such as eToro, Tradestation, and Sofi Active Investing. Robinhood offers free cryptocurrency trades.
Advantages Of Cryptocurrency
Secure And Private
Privacy has always been the priority for cryptocurrency. The blockchain ledger is based on different puzzles, which are hard to decode. It uses pseudonyms that are not connected to any user, account, or stored data that could be linked to a profile. So Cryptocurrency is best when it comes to security and privacy.
Currency Exchange Can Be Done Easily
Cryptocurrency can be bought in any currency such as Indian Rupee, US dollar, European Euro, British Pounds, etc. One currency can be converted into another by trading cryptocurrency with the help of different cryptocurrency wallets and with minimal transaction fees.
Accessibility
As cryptocurrency can be sent or received with only a smartphone or computer, they are available to people without having access to traditional banking systems, credit cards, or other methods of payment.
Low Transaction Fee
In a bank to carry out any transaction, you have to pay a transaction fee. So if you are making a lot of transactions in a month then the fee would be extremely huge. While in cryptocurrency as the data miners receive their compensation there would be low or no charges on the transaction. If you are entrusting the responsibility of maintaining your crypto wallet to a third party, you must pay for the service. But the transaction fees of cryptocurrency will be lower than traditional banks.
Disadvantages Of CryptocurrencC
Wallet Can Be Lost
If a hard drive crashes or a virus corrupts the data, and the wallet file is also corrupted and your cryptocurrency can be lost and you can do nothing to recover it. This can bankrupt a wealthy Bitcoin investor within seconds with no way of recovery. The coins the investor-owned will also be permanently lost. So it is a risky investment.
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Not Widely Accepted
Cryptocurrency is only accepted by a small group of online merchants as not everyone is familiar with this and yet it has not gained popularity and acceptability by everyone which makes it illogical to completely depend on cryptocurrency. There is also a possibility that governments might force merchants to not use cryptocurrency to ensure that users’ transactions can be tracked.
No Refund Or Cancellation Policy
If someone mistakenly sends cryptocurrency to the wrong wallet address, so the coin cannot be retrieved by the sender. This way many people can cheat others’. Since there is no refund or cancellation policy many can be cheated by the cryptocurrency system.
Some Coins Are Not Available In Other Fiat Currencies
Some cryptocurrencies can only be traded in few fiat currencies. So the user has to convert these currencies into other major currencies like Bitcoin or Ethereum first and then through other exchanges, to their desired currency. This applies to only a few cryptocurrencies. By doing this the user has to pay extra transaction fees, costing them unnecessary money.
