Having emerged as a digital alternative to more traditional methods of exchange like cash or credit cards, cryptocurrencies have also generated alternative points of view.
On the one hand, there’s the school of thought which sees cryptocurrencies as a financial medium for fraudsters, terrorists, and criminals – especially given their involvement in ransomware scams, and in trading on the Dark Web.
On the other hand, recent upsurges in the value of Bitcoin have established cryptocurrency as a viable investment
Today we will be looking at some advantages of crytocurrency.
1. Transactions
In traditional business dealings, brokers, agents, and legal representatives can add significant complication and expense to what should otherwise be a straightforward transaction. There’s paperwork, brokerage fees, commissions, and any number of other special conditions which may apply.
One of the advantages of cryptocurrency transactions is that they are one-to-one affairs, taking place on a peer-to-peer networking structure that makes “ cutting out the middle man ” a standard practice. This leads to greater clarity in establishing audit trails, less confusion over who should pay what to whom, and greater accountability, in that the two parties involved in a transaction each know who they are.
2. Asset Transfers
One financial analyst describes the cryptocurrency blockchain as resembling a “large property rights database,” which can on one level be used to execute and enforce two-party contracts on commodities like automobiles or real estate. But the blockchain cryptocurrency ecosystem may also be used to facilitate specialist modes of transfer.
For example, cryptocurrency contracts can be designed to add third party approvals, make reference to external facts, or be completed at a specified date or time in the future. And since you as the cryptocurrency holder have exclusive control of your account, this reduces the time and expense involved in making asset transfers.
3. Transaction Fees
You’ve no doubt read your monthly account statements from the bank or credit card company, and balked at the level of fees imposed for writing checks, transferring funds, or breathing in the general direction of the finance houses involved. Transaction fees can take a significant bite out of your assets – especially if you’re performing a lot of transactions in a month.
Since the data miners (remote and separate computer systems) that do the number crunching which generates Bitcoin and other cryptocurrencies receive their compensation from the cryptocurrency network involved, transaction fees usually don’t apply.
4. Easier International Trade
Though largely unrecognized as legal tender on national levels at present, cryptocurrencies by their very nature are not subject to the exchange rates, interest rates, transactions charges, or other levies imposed by a specific country.
And using the peer-to-peer mechanism of the blockchain technology, cross-border transfers and transactions may be conducted without complications over currency exchange fluctuations, and the like.
5.Identity Theft:
When you give your credit card to a merchant, you give him or her access to your full credit line, even if the transaction is for a small amount. Credit cards operate on a “pull” basis, where the store initiates the payment and pulls the designated amount from your account. Cryptocurrency uses a “push” mechanism that allows the cryptocurrency holder to send exactly what he or she wants to the merchant or recipient with no further information.
6.Access to Everyone
There are approximately 2.2 billion individuals with access to the Internet or mobile phones who don’t currently have access to traditional exchange, these people are primed for the Cryptocurrency market. Kenya’s M-PESA system, a mobile phone-based money transfer, and microfinancing service recently announced a bitcoin device, with one in three Kenyans now owning a bitcoin wallet. (Let me repeat that again. 1/3)
7.Decentralization
A global network of computers use blockchain technology to jointly manage the database that records Bitcoin transactions. That is, Bitcoin is managed by its network, and not any one central authority. Decentralization means the network operates on a user-to-user (or peer-to-peer) basis. The forms of mass collaboration this makes possible are just beginning to be investigated.
8. Adaptability
There are currently over 1200 unique cryptocurrencies or altcoins in circulation worldwide. Many are quite ephemeral, but a significant proportion have been created for specific use cases that illustrate the flexibility of the cryptocurrency phenomenon.
For example, there are “privacy coins” which help mask your identity on the blockchain, and supply chain tokens which can facilitate supply chain operations for various types of industries.
9. Strong Security
Once a cryptocurrency transfer has been authorized, it can’t be reversed as in the case of the “charge-back” transactions allowed by credit card companies. This is a hedge against fraud which requires a specific agreement to be made between a buyer and seller regarding refunds in the event of a mistake or returns policy.
Finally, the strong encryption techniques employed throughout the distributed ledger (blockchain) and cryptocurrency transaction processes are a safeguard against fraud and account tampering, and guarantors of consumer privacy.
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