Cryptocurrency can be described as a form of digital currency that is created as well as managed via the use of certain advanced encryption methods known as cryptography. It made the significant leap that transformed it from an academic concept to reality. This development was marked by the invention of Bitcoin in the year 2009. Cryptocurrency can be utilized as an actual currency and as an effective medium of exchanging things.
Cryptocurrency is usually created electronically and stored in the same manner. This means that it can only be stored on websites and computers. It can be used to purchase virtual things, to shop online, and to purchase physical services and physical goods with online payment. Cryptocurrency is beneficial to people who have lost trust in the traditional banking system.
What Are Cryptocurrencies?
The following are some of the cryptocurrencies that are currently available in the market and the dates that they were introduced:
- Primecoin that was introduced in 2013
- Mastercoin that came into use in 2013
- Namecoin that was created in 2011
- Dagecoin that was made in 2013
- Peercoin that came into the market in 2012
- Auroracoin, invented in 2014
- Litecoin that came into the market in 2011
- Ripple that came into use back in 2013
- Bitcoin, which is the oldest and started being used in 2009
- Many others, such as Dash and Ether
There is an upcoming cryptocurrency called ZCash. It can be defined as an open source and decentralized cryptocurrency. It is set to bring fungibility to the growing cryptocurrency, and it achieves this through the unlinking of shielded coins that is from their blockchain history.
Z cash is bringing blockchain technology cutting-edge cryptography. This is because zero-knowledge proofs permit the confirmation of fully encrypted transactions as valid. Z cash will allow users to benefit from the use of public blockchain but still protect their private information.
There are several benefits that are associated with cryptocurrency, the main ones are as outlined below:
Fast And Easy Payment
It allows for both easy and fast payment. This is because one that does not require any document or credit card, the address of the organization or person that the money is being transferred to should suffice. Furthermore, the processing of the payment transfer is quite fast as it takes just a few seconds. This is useful in such a fast-paced life.
When military grade cryptography is used it guarantees security in transactions. This is because no one else except the person who owns a wallet can make payments or transfers using it. There is no need to trust any person when using cryptocurrency.
Payment Processing companies and banks normally charge some fees to conduct fund transfer and payments, but these can be eliminated with cryptocurrencies. The network is responsible for compensating the miners.
Since cryptocurrency is a digital product, it cannot be counterfeited or reversed as it is the case with credit cards. This helps in curbing the menace of fraud that many people fall a victim to.
Cryptocurrency eliminates third party approvals, especially in buying real property.
The use of cryptocurrency in business has the benefit of mutual exposure. Both parties benefit from an arrangement when they sign on with a vendor.
Bank accounts and credit cards can be problematic for international transactions, but this is not the case with cryptocurrency. This is because cryptocurrency is not bound to the status or rules of any government, country-to-country transaction fees, interest rates, and exchange rates.
ATM, debit, and credit cards are usually linked to home address, name, and other unique personal information. No transaction that involves cryptocurrency contains any kind of personal information. This is to say that it promotes privacy.
Cryptocurrency is gaining good reputation as well as a sense of legitimacy, with both vendors and customers.
The above benefits of cryptocurrency are not exhaustive as they are numerous.
There are a few limitations that cryptocurrency have, and these are:
Losing Your Wallet
There is no way of recovering digital currencies that were stored in the system or mobile that got lost. In addition, a complaint cannot be filed with the police.
There are not many companies or websites who have widely accepted the use of cryptocurrencies. This means that people have to conduct research to confirm if a service provider will accept the use of cryptocurrency. This is mainly because many individuals are unaware of cryptocurrency.
Cryptocurrency lacks a central point in the processing of payments. This means that if a user makes a mistake in the transfer process there is no refund or option to dispute.
Overall, it is a long way before cryptocurrency can replace traditional currencies and credit cards. It is still in its infancy and still requires several years of exposure to the world system before the masses can begin to accept its use. The challenge still lies in the limited knowledge of cryptocurrencies as many people do not know about them or have limited knowledge concerning them.