To delve deeper into this new way of managing money, it is interesting to know what its benefits are, as well as its risks.
In this sense, we must point out that cryptocurrencies are characterized by being volatile. An element that lies between an advantage and a disadvantage, as the user can double their earnings from one day to the next, as well as lose them quickly.
ADVANTAGES
-They are global currencies
These virtual currencies are not regulated by any type of governmental organization, such as the State, banks, financial institutions, or companies. This allows them to be used anywhere in the world.
For example, Bitcoin claims that “just as no one controls the technology behind email, Bitcoin has no owners either”. Thus, this type of cryptocurrency is controlled by all its users. Therefore, although programmers improve its software, they cannot make a change without the consent of all clients.
-They are secure
According to experts, the counterfeiting or duplication of cryptocurrencies is impossible thanks to a sophisticated combination of proven cryptographic techniques. In this sense, each person has cryptographic keys that are necessary to carry out any type of digital operation.
-Some cryptocurrencies are deflationary
Cryptocurrencies like Bitcoin or Litecoin have limited the issuance of their virtual currencies. In the case of Bitcoin, to 21 million and Litecoin to 84 million. This makes them deflationary cryptocurrencies, as the issuance of these digital currencies decreases over time.
-They have irreversible transactions
Another of their advantages is the irreversible transactions. That is, if cryptocurrencies are used, no third party can cancel or modify a transaction that has already been made. This is because they are not regulated by a central body that can access them.
-They are characterized by their immediacy
One of the advantages for e-commerce, for example, is its immediacy. If we have international customers, this payment method could greatly speed up the exchange process, especially between banks in countries that do not have treaties with each other and have to go through a central bank, causing payment processes to be delayed by several days.
-They are transparent
All transactions made through Blockchain are public. The blockchain file is stored on multiple computers in a network, and not in a single location. Thus, this type of storage allows it to be readable by all users, making it transparent and difficult to alter.
DISADVANTAGES
At the same time, we find a series of disadvantages in cryptocurrencies that may be the cause of their non-acceptance in society and the distrust of potential and future users.
-Possible loss of money
One of its main dangers, and its riskiest characteristic, is that if you lose the private key to access your wallet, you lose all the money you had in it, as it is virtual money. Therefore, it is advisable to have a backup copy of your wallet to avoid this fateful situation.
-Changes and lack of regulation
Currently, there is already work being done on their regulation and there are several European Union directives pending approval.
-Distrust among potential users
Although the trend of cryptocurrencies has been growing in recent years, many companies have not yet dared to use this virtual currency. One, due to the risk of price fluctuations, and two, due to the lack of knowledge about the benefits that cryptocurrencies can bring.
Bitcoin is the most secure cryptocurrency, with a hash rate so high that it eclipses that of all other proof-of-work coins combined.
