Cryptocurrency and why it’s become so popular
The rise of cryptocurrencies
Cryptocurrency is digital currency working as a medium of exchange with robust and secure transaction, and verifiable transfer of assets visible to everyone. Cryptocurrency uses a distribution ledger called the Blockchain, which isn’t operated by a centralised authority. Bitcoin, one of the most famous forms of cryptocurrency, become so popular that the value rose from under $1,000 to $19,000 in 2017 alone. Cryptocurrency is turning heads everywhere and here’s the reason why it’s become so popular.
As previously mentioned, cryptocurrency operates under a technology called the Blockchain. This distribution ledger is available for everyone to see, which creates a more trustworthy and efficient way for institutions and people to store information without a centralized authority controlling it.
This means that the transactions are all decentralized with no involvement from any kind of financial institution, such as banks or the government. Only the payer and payee is responsible for one transaction. There are mediums of exchanges where you can buy cryptocurrency on your own. Information on transactions and exchanges are shared in real time and updated only once both parties of the transaction come to an agreement.
In the financial markets, cryptocurrency has the same dynamics as equities. Since prices of cryptocurrencies are also being traded in the market, there is an opportunity for people to invest and engage in arbitrage as they utilize the Blockchain technology. Because it has been giving higher returns as compared to other investments, many people are already tapping into the crypto market.
Because of its usefulness, large IT corporations and firms are also creating software for the Blockchain to be used in financial markets. This added to the popularity of cryptocurrency and influenced acceptance in society. For instance, global firm IBM has created the IBM Blockchain, which is a platform that empowers businesses and financial institutions to make use of cryptocurrency.
No human involvement
In monetary transactions, the usual bottleneck lies with the involvement of human capital. With this technology, you will no longer need human intervention to initiate transactions and enforce agreements. The Blockchain will lessen the friction within the value chain with its model. Moreover, this technology advocates some sort of independence and freedom from the control of a large corporation or the government.
The Blockchain is also being acknowledged to facilitate cross-border payments. It also executes agreements and commercial transactions with what they call the “smart contracts.” With these “smart contracts,” there is no need for human interaction. Everything will be done online and transacted through the Blockchain. All transactions will be traceable, but have no personal identification along with it.
Prevention of hacks and scams
Many experts call cryptocurrency and the Blockchain as virtually unhackable. Since cryptocurrency runs on what we call the Blockchain, one of the most known advantages of cryptocurrency is the prevention of payment scans. Data is accessible to everyone, leading to transparency. With a shared ledger, it is resistant to any kind of tampering, and information is shared at once and updated every second. This reduces any opportunity to commit fraud.
Furthermore, once confirmation is done on a cryptocurrency transfer, the transaction can no longer be reversed, unlike credit cards where there are “charge-back” transactions. This is also a preventive measure against fraud. The user has complete control of transactions with no possibility of a third party to manipulate the transaction. The security cryptocurrency provides also contributed to the rising popularity of the currency.
Accepted form of payment
Because of its security, it has already been thought of as an efficient and secure way of transacting. Some schools and stores in other parts of the world are already accepting cryptocurrency as payment for goods, services, and even tuition. The receptiveness of people is also a testament to how famous it’s becoming and of its potential in the future.
The banking and retail industries are also slowly adopting and incorporating cryptocurrency, which ultimately drives its value. With more people using cryptocurrency, the more traction it gains, and the higher the cost it has. We might be going into a cashless society sooner than we think.
Private and fast transactions
The speed of cryptocurrency transactions can be compared to lightning speed since it can do seven transactions per second at its optimum level. If an application is used, it could be scaled up to millions of transactions per second. Because of this, people have quickly adopted the currency. Since there is no middle-man in the transaction, the transfers are also faster, which makes it popular against existing forms of payment.
In addition to that, the identity of who made the transactions are protected since there is no centralized body that holds all the information of the people who made the transactions. Your crypto wallet is not tied to your own identity, which provides privacy for consumers. As a result, every single person who uses the Blockchain for transactions will have their identity protected.
Eliminates additional charges
Many times, remittance and fund transfers globally and even locally become costly. Banks often charge additional fees for transfer to other banks or other countries. With cryptocurrency, there are no fees since there is no centralized body of authority. Extra fees sending money internationally is nonexistent on all types of cryptocurrency. The Blockchain simply recognises a destination wallet, but it has no indication of the location of the wallet.
Moreover, in investments and brokerage houses, there is often a commission, fee, or extra charge in having those middlemen. With cryptocurrency, those charges are eliminated since you no longer have to go through a broker or an investment bank to perform these transactions.
The rise of cryptocurrencies cannot be denied and is still emerging to be the up-and-coming technology. Some people think that cryptocurrency is the future of currency because of its features. Even though the complexities of cryptocurrency are yet to be ironed out, it still continues to gain traction. It is expected that cryptocurrency will be a success in the future as it is now.