Cryptocurrency in the World of Finance 2021
Reportasee.com - The popularity of Bitcoin has been on the rise in the past few years and is often the talk of many people. Bitcoin is one example of Cryptocurrency or so-called digital currency.
In an era that is completely digital like now, the use of digital currency in various virtual transactions has become commonplace. In fact, many people are interested in investing in cryptocurrency.
Even though this investment is very profitable, there are still signs that you must pay attention to before buying the digital currency. Come on, get to know more about cryptocurrency in the financial world.
Understanding Cryptocurrency
Cryptocurrency is a virtual currency that is commonly used to make virtual transactions on the internet network. The passwords used to carry out transactions are quite complex to protect and maintain the security of this currency.
The word "cryptocurrency" comes from combining two syllables, namely "cryptography" and "currency". Cryptography Has the meaning of a secret code, while currency means currency. In fact, the concept of cryptography has existed since the days of World War II. At that time, Germany used cryptography to send secret codes so that the opposing party could not easily read them.
The difference between virtual currency and conventional currency is that conventional is centralized while virtual is decentralized. This means that there is no party who is an intermediary or intermediary in a transaction. Payment is also direct from sender to recipient or peer-to-peer.
All transactions that take place will still be recorded and monitored in the cryptocurrency network system. Cryptocurrency miners are the loggers of these transactions and get a commission in the form of virtual money that can be used.
Types of Cryptocurrencies That Are Already In Circulation
Even though it has been developed since the 1990s, it has only been known by the global community for the past 10 years. Several types of cryptocurrencies include Ethereum, Litecoin, Ripple, Monero and Bitcoin. Currently, approximately 1,000 cryptocurrencies are circulating around the world.
However, Bitcoin is one of the currencies that is always on the top and most popular list. Satoshi Nakamoto, who is the creator, only created 21 million coins according to the agreed protocol. Experts predict that the miners won't run out of mining until 2140.
You can do bitcoin transactions only with a computer device, without going through financial institutions or banks. Furthermore, there is a blockchain system which makes transactions even more secure. Blockchain is like a ledger that can do the job of recapping every transaction activity on a system that works in a decentralized, valid, and error-less manner.
The scheme gives rise to an assessment that transactions using currency are easier, safer and more practical than through conventional banks.
Cryptocurrency Pros and Cons
Then, is investing in cryptocurrency safe enough? Before you decide on an assessment, it would be good if you know the advantages and disadvantages.
Advantages
The potential for higher price increases in the future
With blockchain technology, the payment process will take place quickly, easily and safely.
To minimize money counterfeiting, because the existing blockchain system will not allow the same currency to perform two different transactions.
Personal data security, you can make transactions safely without displaying your real identity.
Deficiency
There is a risk of breaking the law, because of government regulations that prohibit the existence of cryptocurrency.
Volatility tends to be high, meaning a condition when the value of the currency will suddenly experience a high increase or decrease in the value of the currency drastically.
The difficulty is predicting the future value of the currency, so the potential losses are greater. Sometimes the exchange rates are too high.
Forgot your digital wallet key or wallet key. Investing requires you to have an e-wallet. Forgetting the password or e-wallet pin is disastrous in storing that money.
Starting an investment from an instrument with minimal risk
Cryptocurrency is an internet network-based currency, its use by certain parties which ensures the confidentiality of personal identities in the protection of a proven blockchain system.
However, this does not make cryptocurrency a minimum risk, without the existence of legal umbrella regulations, transactions are high risk. Not to mention, when there is a problem of unstable fluctuation in the value of money, so that the rise and fall of the currency is so fast.
Transaction Activities
For those of you who have been mining cryptocurrency regularly, you can start using virtual currency to be able to carry out several types of transactions.