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The Digital Cryptocurrency Market- What Is Cryptocurrency?

Cryptocurrency bitcoin

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Cryptocurrency took the world by storm when it was introduced in 2009 in the form of bitcoin. Crypto has been an oft-misunderstood finance mechanism. From being perceived as a conduit for illegal purchases to a get-quick-rich Ponzi scheme and even a mystery box. However, in its simplest form, it is just a virtual currency that uses digital files as money. 

Cryptocurrency is a digital currency that uses the internet as the medium of exchange to conduct financial transactions. It uses cryptographic algorithms. Cryptocurrencies are decentralized ledgers that almost always make use of a public blockchain to keep track of and secure financial transactions. 

Cryptocurrency market
Source: worldview.stratfor.com

There are several cryptocurrency markets to transact in various forms. The most popular amongst them are Bitcoin, Ethereum, Tether, XRP, Chainlink, and Bitcoin Cash. Cryptocurrency value fluctuations can be seen in crypto markets as they are easily influenced by market sentiments. It is a design decision made by the developers of the core technology to limit the production to a fixed quantity of 21 million BTC. Unlike regular currency, which can be changed by financial institutions. 

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4 Advantages Of Cryptocurrencies

Crypto offers many real-world advantages and is increasingly being used for mundane purchases like clothes and food items. Some of the major advantages of using cryptocurrencies are listed below.

Cryptocurrency exchange
Image source

Decentralized – Firstly, there is no central authority controlling cryptocurrency, because of which, it is immune to the vagaries of government interference and jurisprudence. Its supply and demand cannot be determined by a bank or government laws. Crypto is a safe investment.

Transparency – Secondly, once a transaction is done, the payment made or received is uploaded across the entire crypto network. The biggest advantage presented by crypto is the underlying blockchain technology, which creates a completely transparent financial system. It is important to note that as everyone is pseudonymous on the blockchain network, there is no need to fear about everyone knowing about your transactions. 

Cheaper – Moreover, crypto transactions occur directly between two users, using private and public encryption. This helps avoid the huge transaction fees usually charged by banks and other financial institutions. 

No Geographic Restrictions – In addition, unless a country bans crypto transactions outright, crossing borders does not affect the value of your crypto transactions. Say you are looking to resettle in Germany from Britain, the value of your crypto coins will not depend upon currency fluctuations or exchange rates. 

Where Can One Use Cryptocurrencies?

Cryptocurrency logo
Source: bravenewcoin

Source: bravenewcoin

An increasing number of retailers/companies are already accepting cryptocurrencies or similarly will soon accept them in their retail or web channels. 

Travel: Virgin Airlines, Norwegian Air, CheapAir, Destinia, Sky-tours, BTCTrip, Expedia

Eating: Takeaway.com, Lieferando, When Hungry, Just Eats, Starbucks

Electronics: Newegg, Overstock.com, Funraiden, Gadgets Direct

Peer-to-Peer Purchasing: Since no financial institutions act as intermediaries, peer-to-peer transactions can be easily done at a fraction of the costs of using legacy transfer systems. 

How Do Cryptocurrency Markets Work?

Cryptocurrency markets are decentralized, which means that they are not issued or backed by a central authority such as a government or financial institution. Rather, they run across a network of computers and can be bought and sold through exchanges and stored in ‘crypto wallets.’

Blockchain cryptocurrency
Source: www.statista.com

Here are some links for the latest Blockchain & Bitcoin News: Thebitcoinnews, Cointelegraph, Coindesk

Summary

In conclusion the use of cryptocurrency is expanding. It is being increasingly used and accepted by a younger generation, steadily moving towards mainstream adoption. The Coronavirus pandemic is expected to further increase the adoption of cryptocurrency for buying regular items like air tickets, groceries, pizzas, and fuel. Cryptocurrencies can also increase the diversification of an investor’s portfolio. 

As the market matures, cryptocurrencies will grow in use and gain further acceptance. They are heralding a change in the financial world, as institutional investors, central banks, and governments are beginning to realize their potential. While crypto has a great future, early adoption with minimal speculation is the best way forward. 

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