Cryptocurrency Future
Cryptocurrency coins | Image credit: copperpipe/freepik

Cryptocurrency; Advantages, disadvantages and it’s future

Author at TechGenyz Bitcoin

There have been a lot of changes in the way people invest their money. You may have heard that a lot of people are investing in something called cryptocurrency. A cryptocurrency is a virtual or digital currency. This is a form of currency that has been secured by something called cryptography.

This type of programming makes it nearly impossible to counterfeit digital forms of currency. When compared to traditional forms of currency, many cryptocurrency options function using something called a decentralized network. It is based on something called blockchain technology.

This is a distributed ledger that is kept in force by computers that are separate but work together. Instead of being controlled by a central authority, such as a government, cryptocurrency enforces itself using its technology.

Therefore, digital currencies are immune to manipulation or interference by governments. This has led to a rapid rise in popularity, as many people are educating themselves about cryptocurrency by turning to Rubix

What Are the Different Types of Cryptocurrency?

Without a doubt, the most popular form of cryptocurrency is Bitcoin. It was the first type of cryptocurrency to be invented, and it is still the most valuable to this day. Now, there are thousands of other types of cryptocurrencies. Each of them has its own functions and specifications. Some of these cryptocurrency examples branch from Bitcoin. Other cryptocurrencies have been built from scratch. 

Some of the most popular cryptocurrencies that have been invented in the wake of Bitcoin include Litecoin, Ethereum, and Dogecoin. These cryptocurrency examples are now worth hundreds of billions of dollars. Bitcoin still represents the vast majority of the value of cryptocurrency. It is interesting to note that some of the cryptography that is used to power Bitcoin and other forms of cryptocurrency was originally invented for military use. 

What About the Blockchain Technology Functionality?

One important piece of technology that powers all forms of cryptocurrency is called blockchain technology. Blockchain technology is important for cryptocurrency because it is used to keep an online ledger of every transaction that has ever been conducted using cryptocurrency. It is immutable, meaning it cannot be changed. It is a letter that is shared, secured, and agreed upon by the entire computer network.

Every computer that is a part of the blockchain represents an individual node. In order for a block to be added to the blockchain, the other pieces of the blockchain, or computers, have to verify that transaction. Therefore, it is impossible to forge transactions using cryptocurrency. 

As cryptocurrency becomes more popular, a lot of people are looking at alternative functions for blockchain technology. For example, a lot of people believe that blockchain technology can be used for crowdfunding and online voting. Because cryptocurrencies are virtual, and not stored on a central database, there is the potential for a cryptocurrency balance to be completely wiped out by the loss of a hard drive.

Therefore, a lot of people are still hesitant to rely on cryptocurrency for things that are more important than virtual currency.

What Are the Advantages of Using Cryptocurrency?

As cryptocurrency has gotten more popular, a lot of people are starting to wonder just how far it can go. One of the major advantages of cryptocurrency is that it makes it much easier to transfer funds between third parties. If you were to transfer funds using a traditional route, you would need the assistance of a bank or credit card company.

These entities might also charge you money to complete the transaction. With cryptocurrency, this is not a problem. There are keys that are used to secure the transaction every step of the way. Therefore, people do not need to worry about having their identities stolen in the process.

There are two different types of keys. The wallet has a public key. The private key is only known to the owner and is used to sign transactions. Fund transfers are completed using cryptocurrency with minimal processing fees.

Therefore, people do not have to worry about paying steep fees that are traditionally charged by financial institutions, such as banks, when a wire transfer is initiated. Because cryptocurrency is secure and private, a lot of people enjoy using it to transfer funds from person to person. 

What Are the Disadvantages of Cryptocurrency?

Of course, if there are advantages to using cryptocurrency, there have to be disadvantages as well, correct? Cryptocurrency transactions are semi Anonymous. Therefore, they are well suited to illegal activities as well. Even though many people use cryptocurrency to avoid steep fees that are charged by banks, a lot of people also take advantage of anonymity to carry out illegal activities. 

For example, it is relatively easy for people to use cryptocurrency to evade taxes. People can also use cryptocurrency to launder money. Even though anonymity makes it easier to complete illegal activities using cryptocurrency, a lot of people also like anonymity because this provides privacy protection for activists and whistleblowers that are trying to avoid repressive governments. Because there are multiple types of cryptocurrency, some forms of cryptocurrency are more private than others.

As an example, Bitcoin is not a good choice for conducting illegal business. The forensic analysis of the blockchain technology used to power Bitcoin has helped authorities arrest and prosecute criminals. On the other hand, there are other forms of cryptocurrency that are more private that could make it harder for people to trace their activities.

What Is the Future of Bitcoin?

Now, a lot of people are wondering what the future holds for Bitcoin and other forms of cryptocurrency. Some people are wondering if cryptocurrency can replace traditional forms of currency as a medium of exchange for goods and services. Right now, it takes far too long to carry out a single transaction in order for cryptocurrency to be used in this way.

As technology continues to improve, it is possible that the versatility of Bitcoin could improve in the future. It will be interesting to see what happens next.