Very recently, cryptocurrency has started gaining momentum. Although it is not as widespread yet, there may come a time in the near future where it will be one of the preferred modes of payment. Bitcoin, which is the most popular cryptocurrency, is world’s first decentralized person to person digital currency. Although a few people admit that it is a revolution for the current financial markets, a lot more are bound to follow suit with time. At the moment, since it is still new, people still do not understand it fully and this may explain to some extend its seldom adoption. Bitcoin also has its own advantages and disadvantages.
Bitcoin transactions are more secure and do not contain the customer’s details therefore protecting both parties from fraud and identity thieves. Compared to the ordinary banking channels, these transactions are very fast and can be processed right away. Bitcoin is decentralized meaning that no one has control over it. Unlike card transactions that require you to give up your information, Bitcoin transactions only uses two keys; a private and a public key. The public key, which your bitcoin address, can be viewed by anyone but the private key is confidential. Every transaction requires a combination of both keys and the application of a mathematical function which creates a certificate that proves the transaction actually came from you.
Unlike the physical currency that is prone to inflation, bitcoin is not. This is because only a finite number of bitcoins will ever be created, 21 million bitcoins to be exact. This means that when this is achieved, more bitcoins will not be able to be generated therefore, eliminated the possibility of an inflation.
On the other hand, cryptocurrencies still experience a low degree of acceptance. This is because the majority of people are uninformed or know very little about them. Bitcoin prices are very volatile and the whole bitcoin and cryptocurrencies softwares are still majorly under development, it can be considered a very risky investment because no form of insurance is available.
Cryptocurrencies’ rose into prominence because of their use in the black market and in money laundering since no personal details were required for the transactions meaning no one could ever be implicated. This may have contributed to the slow rate of acceptance to recognize cryptocurrencies as a currency just like any other. With both its advantages and disadvantages, it is notable that some countries like the UK and the US have been using bitcoins smoothly and even Japan has recognized it as an official mode of payment and implemented tax policies to that effect. This is just the beginning and sooner or later, more countries will most likely follow suit.