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What is the Point of Cryptocurrency?

by Simon
What is the Point of Cryptocurrency

We are living in a world where the power lies in the hands of a few, what is the Point of Cryptocurrency ? Governments, banks, and financial institutions control all of the assets and money. The online banking systems that work on traditional modes are prone to hacking and such an instance would cause a huge disruption in the financial system of a country and could cripple the economy. Also, regulatory agencies can confiscate anyone’s property at any moment. 

These are a few serious issues with the current monetary systems and traditional currencies. To solve this problem and to provide the power and control back to the users, a new system of currency was created in the form of bitcoin. Bitcoin was decentralized, meaning that no one agency, institute, or government-regulated this currency. It is owned and regulated by those who own it, meaning that it returns control to the common people. This was one of the major points of cryptocurrency. 

Other points for the cryptocurrency include the facts that these currencies are owned by everyone, are impossible to hack, or forge, transactions are confidential, and the security of your assets keeps on growing. All of these points are discussed below. 

Find out after what Stablecoin is?

Cryptocurrency Is Owned by Everyone

This is true, cryptocurrencies are owned by everyone on the network. The normal currencies or fiat currency notes that are printed by the government are a form of debt. A debt that the government takes against its resources. But cryptocurrencies have a different concept, different types of cryptocurrencies. These are not debt-based currencies. Meaning that it has a different value and that its value is determined by the buyer and how much he/she is willing to pay for that. 

interest of crypto

Apart from the fact that cryptocurrencies are owned by everyone, they are regulated by no one. This means that these currencies are not maintained by an authoritarian government or any agency (which is the case with all fiat currencies). Meaning that we do not have any control over our fiat currency but we do have control over cryptocurrencies. This is the first solution that the cryptocurrencies represented and it is one of the major points for cryptocurrencies

Cryptocurrency Is Almost Impossible to Forge

Governments spend millions and millions of dollars to prevent the forging of currency notes. But in the case of cryptocurrencies, these are impossible to forge. This is because these currencies are based on blockchain technology. You can think of the blockchain as a digital ledger of transactions, and information, that contains details of every transaction and every new block of currency that is created. 

So, whenever a transaction happens or a new block of cryptocurrency is created, that information is distributed over the network of computers that uses mathematical operations and encryption technologies to ensure that the blockchain is safe and there is no irregularity. This makes the forging of cryptocurrencies impossible and that makes it one of the safest currencies. It reduces the risk of forging and resolves the issues related to fake currency. It can help governments save millions of dollars that they spend on anti-forgery measures. 

security virtual currency

Cryptocurrency Transactions Are (Mostly) Confidential

It is one of the most important points for cryptocurrencies. These transactions are super confidential most of the time. No one knows who is at the sending end or receiving end of the transaction. That means, if you are looking forward to making a safe transaction, you can do this with the help of cryptocurrency. This feature of cryptocurrency is also a reason why a lot of governments are against cryptocurrencies.

If these currencies become regular, governments would lose a lot of transactional data and that can result in loss of revenue for the governments as they charge people when a transaction happens. Also, it poses a security risk. Terrorists might use the crypto transactions to avoid detection from the governments which could increase terrorist threats and it would become impossible to stop terror financing because the transactions are confidential. But governments have developed advanced forensics methods that can help identify the wallet holder’s identity. This type of measure can be used against any type of threat. 

Cryptocurrency Security Grows Through Time & Value

It is one of the most known facts about cryptocurrencies that it is impossible to hack them because they are decentralized and use high-level encryption algorithms. So, with the time these encryptions become stronger and stronger that means, it would require even more computational power to hack these currencies. Apart from that, the value of crypto can also make it impossible to hack. This is because as time passes and the value of the cryptocurrency increases, more and more people join the network and that results in extreme expansion of the network. 

cryptocurrencies transactions

That level of network expansion makes it impossible to hack. Because if anyone wants to hack the network, he/she would have to come up with so much computational power that is impossible to accumulate for not just a person, even for governments, and companies. There are concerns that a quantum computer might be able to decrypt these crypto encryptions but there is no operational quantum computer in the world. So, there is no risk to these cryptocurrencies for a long time. 

These were the four main points related to cryptocurrencies. Each of these points gives some information about why we should use it in comparison to a fiat currency and all of these are valid reasons, that is the point of cryptocurrency, and that is why cryptocurrencies are better than the fiat currencies in the world.

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1 comment

Kurt February 5, 2022 - 10:02 pm

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