Cryptocurrency and blockchain. How is it different from regular money?
Cryptocurrency is digital money protected by cryptographic data encryption. All information about transactions is collected in a blockchain. Blockchain is an endless digital log of information stored on the devices of all participants in the system. Because the data is encrypted and held simultaneously by all participants in the system, cryptocurrency cannot be faked.
The first cryptocurrency was Bitcoin, created by Japanese programmer Satoshi Nakamoto. The first information about Bitcoin appeared on October 31, 2008, where the author disclosed all the advantages of a decentralized currency without any third party. In early 2009, the Bitcoin network was launched as an alternative to fiat currencies and banking systems.
Advantages and disadvantages of cryptocurrency compared to conventional money:
Pros of cryptocurrencies:
Anonymity of the e-wallet owner.
All data about the owners of e-wallets is inaccessible. You can't link a specific wallet to a specific person and demand to account for the funds.
Confidentiality of the transaction. Data about participants of the exchange is depersonalized.
Transaction speed. For new cryptocurrencies, it takes 2-5 seconds to transfer funds anywhere in the world. Compared to international transfers, which take a couple of days, the difference is huge.
Low fixed price per transaction. You do not have to pay a fixed percentage of the transfer amount when sending funds. Depending on the type of token, the fee will be from $2-3 to a few cents.
Protection against counterfeiting. Since the data on balances and the number of tokens is kept by all participants of the system, it is almost impossible to counterfeit funds.
Decentralization. Cryptocurrencies are not subordinate to banks and states. Funds on the balance cannot be seized, frozen, blocked.
Peer-to-Peer system. There are no intermediaries when sending. You don't have to pay interest or report to anyone when making transfers, accepting payments, or opening accounts. No one can refuse to transfer or receive funds. If the transfer is sent, it will definitely reach the recipient.
No inflation. Most cryptocurrencies are limited to a maximum quantity. The issuance of new coins is costly. You can't just turn on a printing press and release unsupported bills of paper.
Minuses of cryptocurrencies:
High volatility. The digital currency market is still very young and subject to the influence of big players and market manipulators. But for some, this can even be a plus, as it allows you to make money.
Attempts of pressure from regulators. Governments do not like it when someone breaks their monopoly on the production of money, especially when it cannot be taken away. Therefore, they try in every possible way to put sticks in the wheels of crypto-enthusiasts.
Impossibility to cancel the payment. Funds sent by mistake can't be refunded or chartered back. So it's a good idea to be careful and cautious when making transactions.
Reputation. So far, cryptocurrencies have a reputation as money for all sorts of hackers, traffickers and soap bubble, which is about to burst (a little bit left, it's been waiting for 11 years). For this reason, does not allow many to discern all the benefits of the blockchain idea.
The danger of losing access to the wallet. If you lose your access keys, you can say goodbye to your funds. So you should back up your accesses.