Cryptocurrency has been one of the most talked-about topics in the current decade. With various advantages and a few unfortunate events, cryptocurrency soon claimed its position in the headlines. Despite all this hype on cryptocurrency, if you also have one question in your mind as to what is cryptocurrency, you are just at the right place. Read on to know everything about cryptocurrency.
What is cryptocurrency?
Cryptocurrency, as the name suggests, is a term coined for virtual currency. No, you cannot touch or feel them. This currency is digitally bought in exchange for physical currency and then can be used to buy a variety of goods and services online. Cryptocurrency is claimed to be a better alternative to physical currency due to its security. Cryptocurrency is secured using5 cryptography, therefore, using the same currency again or creating a duplicate one is near to impossible. As cryptocurrencies are rolled out by different companies with their own set of working principles, this type of currency which is also known as digital currency is untouched by the government. In extremely simple words, cryptocurrency is a set of tokens that can be purchased with physical currency and later used to buy things online.
Why are Cryptocurrencies preferred?
With all this physical money and a variety of technological advances such as paying for goods and services with one click on the mobile phones, sending your loved ones money from another corner of the world within minutes, and getting rewards and referrals for electronic payments, you might be thinking what is the need of cryptocurrencies? Cryptocurrencies have a stark similarity to trading. Just like a trader invests in foreign exchange and earns a profit when the value of the forex increases, cryptocurrency works similarly. When the demand for a certain cryptocurrency increases, the people who have already bought the currency will have a valuable possession that they can sell as per need and earn profits. Apart from this, cryptocurrency is accepted by a variety of brands from whom we can buy goods and avail a lot of services.
What are the advantages of Cryptocurrency?
Cryptocurrencies enable easier and direct transactions of funds from one person or group to another without intermediaries. The regular hassle of communicating with third parties such as banks and credit card companies has been eliminated with the arrival of cryptocurrencies. The security assured by cryptocurrencies also makes it easier for people to go forward with the transaction without any fear.
While going forward with a transaction, the bank or the credit card company charges a certain amount of money depending on the size of the transaction as the fee. Due to no third parties being involved, the fees charged by these intermediaries are also cut down.
What are the disadvantages of Cryptocurrency?
The big old disadvantage of cryptocurrency is the anonymous transaction facility. The fact that this facility allows people or groups to send and receive money without involving a third party and with absolute anonymity gives birth to a lot of opportunities for scams and other illegal activities being conducted over cryptocurrency.
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