Cryptocurrency A Virtual Currency
A cryptocurrency is a digital asset designed for exchanging currencies which uses cryptography for the secured and safe transactions. These are decentralized as there is no central banking system. The safety, integrity and ledger balance is maintained by a group of parties know n as “Miners”. They validate and timestamp the transactions using a computer. Most cryptocurrencies are designed just to reduce the production of that currency. Cryptocurrencies are more difficult for seizure when compared with the ordinary currencies, which are cash in hand.
Cryptocurrencies are used outside the banks and government and they are exchanged only through the internet. They have the capacity to challenge the banking system and payments. The total market capitalization of cryptocurrencies is higher than 278 billion USD and it is recording a very high volume of more than 500 billion USD as of April 2018. The cryptocurrency trading can be done with the help of the Crypto CFD Trader software.
Benefits of cryptocurrency:
There are many benefits to cryptocurrency. They are listed as follows.
- The fund transfer between two parties is very simple and easy. The transfers are facilitated through the use of public and private keys for security.
- Minimal processing fee for transferring fund and it stops the people from paying service fees like other banks.
- It uses an online ledger to store all the transactions between the parties.
- The transactions are very safe and the information cannot be hacked by anyone as there is no central bank interference.
Limitations of cryptocurrencies:
Though there are many benefits, there are few limitations to this.
- It does not have a central repository as they are virtual.
- A digital cryptocurrency balance can be easily erased when the computer crashes and there is no backup copy for the things.
- The currency rate will fluctuate since the prices depend on the supply and demand.
There is a cryptocurrency wallet which stores the public and private keys or addresses used to receive and spend the cryptocurrency. It is possible to write in the public ledger with the private key and it is possible to send currency to the wallet using the public key.
The transaction fees for cryptocurrency is based on the supply of network versus the demand from the currency holder. Cryptocurrency exchanges simplify the process for currency holders by providing priority alternatives. The transaction fee for ether corresponded to $0.33 and for bitcoin, it was $23, in December 2017.
Thus conclude this topic that they are suited mainly for the societies without a well-developed financial infrastructure, as they are not dependent on any central banking. It just requires an internet connection. The cryptocurrencies will become a great influence in the market after five years. They have the capacity to replace all government currencies in the future.