By Zaamil.com on The Capital
If you have a particular interest in finance or technology, you’ve probably heard of cryptocurrencies and blockchain technology. These fascinating subjects have been hot topics over the last couple of years, and this is for a good reason-their role in revolutionizing global commerce. Despite the mixed views, this form of digital currency has truly surpassed the limits of traditional financial systems to introduce a breath of fresh air in an otherwise old-fashioned world of finance. But what exactly are cryptocurrencies?
Overview of cryptocurrency
Cryptocurrencies are a form of digital or virtual currency that uses crypto-graphical functions to secure transactions. This digital currency leverages a decentralized blockchain technology to manage financial transactions. In simple terms, cryptocurrency is digital cash for the modern-day consumer.
Examples of cryptocurrencies include: Bitcoin -Ethereum-XRP-Litecoin-EOS-NEO
Benefits of cryptocurrencies
No interference of third-parties
Cryptocurrencies are not controlled by any centralized authority. This aspect completely eliminates third parties such as banks, governments, and financial intermediaries from a user’s financial transactions. Unlike with conventional currency, cryptocurrencies are based on a peer-to-peer system; hence, they guarantee users a greater degree of freedom.
Cryptocurrency transactions cannot be reversed or counterfeited as in the case with credit card payments. This aspect keeps away fraudsters making this virtual currency a desirable medium of exchange. Unlike conventional payment systems that are vulnerable to hacking and manipulation, cryptocurrency incorporates tamper-proof security features to secure financial transactions. Blockchain leverages advanced cryptography and complicated security algorithms, which cannot be compromised by a human being. Besides, transactions require a two-factor authentication process to approve payments.
Blockchain literally spells the end of exploitative middlemen in transactions between two parties. Middlemen such as lawyers and agents who are typical in traditional asset transfers only raise the cost of transactions in the form of fees paid to them. Cryptocurrency contracts can be customized to add or eliminate third-party approvals. This gives users the power to design contracts based on their preferences.
The elimination of government involvement, as well as third parties in cryptocurrency contracts, allows users to avoid the high fees charged by intermediary financial institutions. Cryptocurrency transfers can be done with very low processing fees and offer instant transfers. Therefore, transacting with digital currency is much convenient as it does not involve waiting periods and bureaucratic authorization procedures. This saves users from the hassles associated with credit card payments which can take days or even weeks to be processed.
Easy international transaction
Cryptocurrencies are recognized at the universal level; therefore, they can be used to conduct international transactions. Anyone around the world can participate in the peer-to-peer network and send or receive cryptocurrencies instantly. In addition, cryptocurrencies are not bound by exchange rates, interest rates, transaction charges, or other levies imposed by specific countries. In a world where currency fluctuations can significantly hurt your budget, anything that eliminates such inconveniences is a plus.
Generally, it’s evident that cryptocurrencies have streamlined financial transactions and have played a considerable role in changing the face of commerce globally. If the numbers of people embracing cryptocurrencies are anything to go by, cryptocurrencies can only grow bigger.