Blockchain has blessed us with many spectacular gifts, among them stars the fascinating cryptocurrencies. Cryptocurrency Market has been looking to integrate into the world of investments for quite a while. However, despite its innumerable and unique features, it has struggled to be a common part of the real world.
It can be due to their volatile nature, as prices never stabilize, which makes users shy away from the new crypto market. Experts still believe that it would be some time before cryptocurrencies are accepted as a currency worldwide.
We can see the erratic progress of cryptocurrency; in 2018 it reached an all-time high record of $800 billion. However, the situation dramatically changed and prices began to drop. So now cryptocurrencies are valued at $200 billion.
What is Cryptocurrency?
As the internet has become more affordable and ultra-fast, courtesy of providers like Windstream Internet Service, more people are utilizing the web to get their daily tasks done. So it’s no wonder that a digital currency entered the fold to match the digital nature of commerce and trading.
Cryptocurrencies are known to function as Digital Gold since they are independent of any political clout and are secure investments. The cryptocurrency market is based on peer-review trades. Currently, cryptocurrencies are being utilized in crowdfunding for startups through Initial Coin Offerings (ICO).
Key Characteristics of Cryptocurrencies
To understand why people love cryptocurrencies, we must study their transactional characteristics, which are singularly unique.
Anonymous: No one can determine the parties involved in the transaction despite the transparent process in the market. However, this feature has gained the attention of U.S. federal agencies such as the Securities and Exchange Commission (SEC) and the FBI, who are worried about its ability to cater to money laundering activities.
Secure: Its cryptograph only allows the owner of a key to unlock cash from devices and exchange cryptocurrencies.
Fast and Global: Cryptocurrency is a global system, surpassing all borders. It only requires a few minutes for a transaction to be approved and mined, which makes them the fastest form of payment as opposed to the traditional accounting system.
Irreversible: Once a transaction is verified and added to the blockchain, it’s then irreversible and its record cannot be erased.
Cryptocurrency does away with the time-consuming and tedious red tape. No one requires special permission or additional fee to use cryptocurrency, download, and use its application.
What is Initial Coin Offerings (ICO)
Initial Coin Offerings (ICO) have become quite popular in bypassing the controlled yet unpredictable method of raising investment capital from banks and investors. ICO is an unregulated process by governmental entities. ICO Wallet is akin to crowdfunding, where a new business offers interested parties an Initial Public Offering (IPO) exchange. Interested investors buy into the offering and receive a new cryptocurrency token provided by the company.
Pros and Cons of Cryptocurrency Market
Many expect cryptocurrencies to become the future of currency and globally accepted medium of exchange. Before that happens, a cryptocurrency needs to go through a continuous process of improvement. In an ideal world, cryptocurrencies have quite a few advantages. However, in the realistic scenario, we must contend with its disadvantages as well.
Advantages of Cryptocurrencies
The concept of cryptocurrency is based on blockchain, and the said blockchain lets us view every transaction that has occurred. As we make any transaction, it is recorded in the blockchain and cannot be removed. Transactions can be checked and verified anytime. We cannot change or edit the records and showcases accurate statistics. Not even an organization or an influential individual can change it. Anyone can work it and look it up anytime. Thus, this makes cryptocurrency the most transparent currency system and the most secure as well.
Independent of Inflation
Regular currencies are riddled with inflation as governments print a lot of money. Fortunately, cryptocurrencies are free of any such hindrances. Upon the issuance of a new cryptocurrency, it is decided beforehand how much amount to generate. Once it is fixed, no one can reverse it. For example, it has been decided that only 21 million Bitcoins can be mined into existence, and no entity can increase or decrease its amount. Thus, you don’t have to worry about inflation with cryptocurrency.
As we transact through traditional accounting mechanism and transfer funds across countries, we have to face tedious red tape, courtesy of unique laws and policies for each country. A lot of restrictions are placed on the type of transaction made, which takes a transaction longer than it should. Cryptocurrency bypasses such laws, policies, and red tape that hinder a speedy transfer of funds internationally.
As blockchain is completely transparent, it makes for a more secure transaction environment. Despite anonymity of parties involved in the transaction, we can track down any thefts or fraudulent activities via blockchain. Making it more secure than real world money.
Disadvantages of Cryptocurrencies:
Lost is Irrevocable
If you lose, you lose irrevocably with a cryptocurrency. If you lose your private key, there is no customer support or an organization in the crypto world that can get you another private key. Till now no one has been able to access their lost cryptocurrencies. Better store your private key in a drive disconnected from the internet, so you do not lose the password. Once you lose your private key, you cannot access your crypto funds.
Huge Market Fluctuations
A lot of people are more interested in cryptocurrency investments rather than actually utilizing them for transactions. It’s easy to buy and sell a cryptocurrency, which fluctuates its price all the time. This makes it as risky as the stock market world.
Transactions Cannot Be Traced
This factor has its pros and cons depending on the situation’s perspective.No one can track a transaction, courtesy of the decentralized nature of its network. Moreover, no central bank, organization or any other entity can regulate it. This opens avenues for criminals and drug dealers to perform shady transactions and hide illegal money, which is why it is considered a huge disadvantage. On the other hand, regular citizens can conveniently transact, buy, and sell it without being traced.
All in All…
Since its pros outweigh its cons, cryptocurrency is loved by most. As with everything new, we would probably deal with cons over time and once we do, cryptocurrency would be our next generation currency.
Baldwin Jackson is a successful digital marketer with expertise in search engine optimization and content marketing. The perfect balance of his analytical ability and creative thinking is what sets him apart from other practitioners in the digital marketing realm. He has helped a lot of small and medium-sized businesses in crafting their digital marketing strategies that are not only cost-effective but delivers results as well.
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