Cryptocurrency: The next big thing in finance?
What is Cryptocurrency?
Cryptocurrency is a digital or virtual asset designed to work as a medium of exchange. It uses cryptography to secure and verify transactions as well as to control the creation of new units of a particular cryptocurrency. Essentially, cryptocurrencies are limited entries in a database that no one can change unless specific conditions are fulfilled.
What is the difference between Cryptocurrency and traditional currency?
Cryptocurrency is decentralized, meaning it is not subject to government or financial institution control. Bitcoin, the first and most well-known cryptocurrency, was created in 2009. Traditional currency, on the other hand, is regulated by central banks and financial institutions.
What are the benefits of Cryptocurrency?
Cryptocurrency offers a number of potential benefits, including:
- Security: Cryptocurrency funds are locked in a public key cryptography system. Only the owner of the private key can send cryptocurrency.
- Anonymity: Transactions made with cryptocurrency are anonymous.
- Decentralization: Cryptocurrency is not subject to government or financial institution control.
- Low Fees: Cryptocurrency transactions have low fees compared to traditional currency transactions.
What are the risks of Cryptocurrency?
Cryptocurrency is a new and relatively untested technology, which means it carries a certain degree of risk. Some of the potential risks associated with cryptocurrency include:
- Volatility: The value of cryptocurrency can be incredibly volatile. For example, the value of Bitcoin fell by over 50% in one day in January 2018.
- Hacking: Cryptocurrency exchanges and wallets are often targets of hacking attacks.
- Scams: There have been a number of high-profile cryptocurrency scams, such as the Bitconnect and OneCoin Ponzi schemes.
- Regulation: Cryptocurrency is currently unregulated in most jurisdictions. This could change in the future, which could have a negative impact on the value of cryptocurrency.