In the age of digital technology, the question of what is a cryptocurrency seems to have ceased to be a difficult question for people. Originally appeared in the 90s, it was not until the 21st century that cryptocurrencies proved their position. This is the “fever” of financial investors because of the benefits and profitability that cryptocurrencies bring. So, what is cryptocurrency, how are the advantages and disadvantages presented? Let’s follow Top10mmo.com to follow today’s article.
What is electronic money?
Cryptocurrency is a type of money created from digital bits, also known as cryptocurrencies. This currency can only be used on the internet environment to pay for expenses, investments, etc. When transacting, participants must ensure three factors: Internet connection, computer network and means of transport. electronic issuer.
History of Cryptocurrency
Cryptocurrencies have been around since the 90s, when the information and digital age began to explode. Inspired by the commercialization process, a number of businesses and organizations have founded cryptocurrencies such as Flooz, Beenz, Digicash, etc. These businesses seem to only focus on and depend on the regulatory system. 3rd party transaction control. This is the cause of their downfall.
After so many decades, the new cryptocurrency officially formed its own empire. Typically, Bitcoin appeared in 2008. Because of the application of Blockchain technology, the transaction of bitcoin does not depend on 3rd party intermediaries and has high security. This is the reason why Bitcoin is growing stronger and is the ideal choice of investors.
What are the 3 main classifications of cryptocurrencies?
Cryptocurrencies are divided into 3 main types with different uses as follows:
Legal currency
Is a cryptocurrency that has been recognized by the government. This is a very popular currency today and is stored in ATMs, bank accounts, e-wallets, etc. Owners can also use fiat money to convert to traditional paper money.
Virtual money
A currency that is issued and managed by organizations and businesses. However, virtual currency is not recognized by the government. They are often used in the form of: Coins in the game, coins, tokens, etc. The purpose is to buy, sell, exchange game items, trade coins or trade on e-commerce sites that accept virtual currency. .
Cryptocurrency:
This is a branch of virtual money, typically the famous bitcoin. Cryptocurrencies are blockchain-based, so they are not regulated by the government. Due to its anonymous operation, it is highly secure and does not need to go through a 3rd party intermediary.
What are the advantages and disadvantages of cryptocurrencies?
Advantages of cryptocurrencies
- Fast transaction: Users can receive and transfer money anytime, anywhere quickly.
- Low transaction fees: The transaction costs of cryptocurrencies are mostly free or very low fees.
- Safety and security: Customer information will be kept confidential in the best way. With advanced technology, fraud will be limited and not dependent on intermediaries.
- E-commerce industry development: Using electronic money to shop online is very popular nowadays. This has spurred parallel development between cryptocurrencies and e-commerce.
- Transparency: With blockchain technology, all transaction information is stored in the blockchain. Therefore, the 2 trading parties can completely verify and track the cryptocurrency easily and quickly.
Disadvantages of Cryptocurrencies
- Difficult to predict: The price range of cryptocurrencies is huge. This poses a risk to holders as the currency can drop drastically.
- Risk of Crime: Because it operates in an anonymous state, cryptocurrencies are difficult to control. Criminals can use this to their advantage to commit money laundering.
- Systemic risks: Cryptocurrencies, especially cryptocurrencies, will be at risk of being lost if there is a hard drive failure, data loss, virus, etc. Holders cannot recover the encrypted amount. pass away.
Conclusion
Cryptocurrency is becoming a craze for investors. This is a fertile land that brings unexpected profitability to investors. However, this currency also has certain advantages and disadvantages. Therefore, learn carefully and be really alert when deciding to invest in cryptocurrencies.
