In recent years, the popularity of Bitcoin has been on the rise and has become the talk of many people. Bitcoin is an example of a cryptocurrency or digital currency. In today's digital era, using digital currency in various virtual transactions has become commonplace.
In fact, not a few people are interested in investing in cryptocurrencies. Even though this investment is profitable, there are still signs that you need to pay attention to before buying digital currency. Let's first identify what cryptocurrency is in the financial world.
Definition of Cryptocurrency
Cryptocurrency is a digital currency that is used for virtual transactions on the internet network. Secret passwords that are quite complex serve to protect and maintain the security of this digital currency.
The word "cryptocurrency" comes from a combination of two words, namely "cryptography" which means secret code, and "currency" which means currency. The concept of cryptography has actually been known since the days of World War II. At that time, Germany used cryptography to send secret codes so that they were not easily read by the opposing party.
Unlike conventional currencies, which are centralized, digital currencies are decentralized. No party is present and acts as an intermediary in a transaction. Payments with digital currency take place from sender to recipient or peer-to-peer.
However, all transactions made are still recorded and monitored in the cryptocurrency network system. It is the cryptocurrency miner who records these transactions and earns a commission in the form of digital money that can be used.
Types of Circulating Cryptocurrencies
Although cryptocurrency has been developed since the 1990s, it has only been around the last 10 years that it has become known to the global community. Some types of cryptocurrencies that are often used include Litecoin, Ethereum, Monero, Ripple, and of course Bitcoin. There are currently more than 1,000 cryptocurrencies circulating worldwide.
However, Bitcoin is at the top of the list of the most used digital currencies. The creator, Satoshi Nakamoto, only created bitcoin up to 21 million coins according to an agreed protocol. Experts estimate that this amount will not be mined until the year 2140. You can make bitcoin transactions via a computer only, without going through a bank or financial institution.
Furthermore, there is a blockchain system that makes this digital currency transaction secure. Blockchain is like a ledger that records every transaction activity in a system that works in a decentralized, valid, and minimal error. This scheme raises the assessment that digital currency transactions are easier, safer, and more practical than conventional banking systems.
Cryptocurrency Advantages and Disadvantages
Then, is investing in cryptocurrency safe enough? Before you judge it, here is an explanation of the advantages and disadvantages of investing in cryptocurrency.
• Advantages
Potential for high price increases in the future. Blockchain technology makes the digital currency payment process fast, secure and easy.
Avoid counterfeiting money because the blockchain system does not allow the same currency to carry out two different transactions.
Personal data security, you can make financial transactions without the need to show your real identity.
•Deficiency
The risk of violating the law due to government regulations that prohibit the existence of cryptocurrencies. High volatility, which is a condition when the value of a currency suddenly increases or decreases in value drastically and in a short time. It is difficult to predict future currency values, so the potential for losses is greater. Sometimes the exchange rate of this digital currency is also too high. Forgot wallet key or digital wallet key. Investing in cryptocurrencies requires you to have a digital wallet. Forgot your password or digital wallet login pin can be disastrous in storing digital money. Start Investing from Low Risk Instruments. @juninhoo