Cryptocurrency is a digital asset that is mainly used as a transaction tool to secure financial transactions, control the creation of additional assets, and control the transfer of any asset with the help of powerful cryptographic technology. It is also known as digital currency or virtual currency. Unlike central banking systems, it is a decentralized control և financial transaction system that operates through a blockchain, used primarily for financial transactions.
The first decentralized virtual currency developed in 2009 was bitcoin, known as a virtual currency, which operates independently without the help of a central bank or administrator. Since then, about 4,000 altcoins of various versions of bitcoin have been developed. Bitcoin is considered to be an equivalent electronic cash system, where users make transactions directly without any intermediary.
Blockchain is a data file consisting of multiple blocks that keeps track of all previous bitcoin transactions. The normal average time for each block is about 10 minutes. The most common use of Bitcoin is supported by an external software called Bitcoin Wallet. Using this software, you can easily store, receive and manage bitcoin unit transactions. To make transactions with Bitcoin, you need to have an account in one of the bitcoin exchanges around the world to transfer fiat currency to that account. Thus, the account holder can make future transactions using these funds. In addition to bitcoin, some other sources of cryptocurrency include oil, which is mainly used for oil: mineral resources.
There are some pros and cons to using digital currency. The main advantages of using virtual currency are the following:
• Provides a fast transparency layer.
Bitcoin usually operates with the help of registers called Blockchain, which registers and monitors each transaction. When the transaction is և recorded in this log, it is considered static. These transactions can be further verified at any time, և in addition, it also և provides security և confidentiality of all transactions made through a particular account.
• Fast development և portable use.
Billions of dollars of bitcoin can be easily transferred from one place to another without the help of a single memory disk. Involvement of any third party in any type of transaction can be eliminated using this bitcoin technology. This will result in an easy և quick transaction without third party approval.
• Low transaction costs.
The transaction costs of these digital currencies are much lower, which makes it more affordable than the real currency for people all over the world. Consequently, the value of any transaction is much lower, which turns out to be a favorable feature for the population when they make a transaction.
• Fight և eradicate poverty.
Often the banking systems և financial institutions do not provide assistance և especially to the backward classes of rural areas. Bitcoin serves as an alternative when it extends its solid financial services to anyone with Internet access. It often serves as a support for the poor and oppressed, who in many cases are not given a viable alternative.
When a new or latest technology appears, there are some negative factors associated with its use, which are as follows:
• Ignorance of the population և unreliable approach.
Due to the lack of knowledge about digital currency, people are more likely to have mistrust in its widespread use. Consequently, there are very few business systems that accept these sources of cryptocurrency, thus limiting the number of business systems that prefer to use virtual currency in their day-to-day transactions.
• Non-traceable transactions.
Because bitcoin transactions are non-existent, it allows for criminal transactions. In such cases, drug dealers and honest people use such virtual currency so that their illegal actions are not easily detected.
• Unstable և uncertain nature.
The cryptocurrency is sometimes volatile and continues to change frequently on a large scale. Sometimes people make a lot of money when the market rates for these virtual currencies go up sharply, and sometimes they make big losses when the price goes down.
Cryptocurrency is an innovative but amateurish concept that could potentially disrupt the entire financial market. It is true that this digital currency has attracted the attention of the world in a short time. There are always advantages and disadvantages to every new technology on the market. To make the most of it, you need to look at both sides before making a decision.