You must have heard of Ethereum. If you haven’t, then you must have heard of Bitcoin. You must have also heard that people make thousands and millions of dollars from cryptocurrency investment. So, why should you care about cryptocurrency?
In this article, we will consider four reasons why we believe you need to pay attention to this next evolution of money.
Everyone owns cryptocurrency
The way cryptocurrency functions is similar to that of traditional and national currencies (with just a few fundamental differences).
A governmental body creates and regulates fiat currency. The fiat currency represents debt. If you own a country’s currency, you hold an ‘IOU’ that is issued by that country.
Cryptocurrency, on the other hand, does not represent debt. It represents itself. The value of cryptocurrency is determined by what people are willing to trade for it.
The decentralized nature of cryptocurrency plays a key role in how the value of its currency is determined. Nobody regulates cryptocurrency. Its value is not affected by the political or central bank’s policies of a country.
Cryptocurrency cannot be forged
The operation of cryptocurrency occurs on a blockchain (a distributed ledger). When you understand blockchain technology, you will understand why it is crucial to powering digital currency.
The ‘block’ comprises chunks of encrypted data while the ‘chain’ is the public database where the blocks are stored and related to one another in a sequential manner.
Every block found in the blockchain has a unique chain that differentiates itself from the other blocks in existence. This code is referred to as a hash. The blocks of information are added to the blockchain chronologically. New blocks are directly added after the last blocks have been created, which also have their unique hash.
In most cases, cryptocurrency transactions are confidential
The traditional currencies issued by governments can be used to privately pay for items using physical cash. Paper, cloth, metal, and plastic currencies constitute a minute fraction of the total amount of fiat currency in circulation. A central authority and financial system regulators can flag and review large withdrawals of physical cash.
The situation is different with cryptocurrency. It uses well-designed math to track the transaction between two parties. This occurs anonymously. Although the ledger can be viewed throughout the world, the individuals involved in the transactions are not known.
<< Read: 5 Amazing Ways To Make Money With Bitcoin >>
Cryptocurrency security increases with time and value
For a hack or manipulation in cryptocurrency to be possible, the hacker would have to control more than half of the computers that make up the consensus network.
The consensus network refers to all the computers that receive copies of the blockchain. Established cryptocurrencies like Bitcoin and Ethereum have cryptocurrency networks that are so back that hacking them is mostly impossible.
Conclusion
Cryptocurrency is an avenue for us to execute peer-to-peer transfers without any of the parties involved having too much power over the system. The merits of this form of currency are still in their early stages. Those that embrace and adopt cryptocurrencies will continue reaping its fruits. It’s left to you to decide the right time to test how this digital currency fits into your life.
As blockchain technology keeps maturing and legitimate blockchains continue flooding the crypto industry, everyone will realize the essence of cryptocurrency and the role it plays as a financial tool.
