All u need to know about crypto currencies and its workings.
As we are moving over the second month of 2023 but the crypto market is burning with the gains of bitcoins and other several cryptocurrencies long after the collapse of the FTX gave a huge impact both internally and externally to the crypto market and the people involved in it both customers and investors.
What are crypto currencies?
Unlike the traditional currencies like dollars and rupees… Crypto currencies are the ones which are encrypted with highly variable values of the traditional currencies mostly dollars which only the owner of the currency can access to.
These currencies are highly safe as they are encrypted in the market where nothing is transparent which is a major security feature of these.
How do these crypto currencies work?
MINING : Mining is the process where the crypto currencies are made by the sellers in a particular quantity according to the situation, who then set a value and release them in the crypto market.
BUY SELL AND STORE : Once released in the market they are purchased by the users stored in their digital wallets and also sold to the others through exchanges.
TRANSACTION AND INVESTMENT : These coins once owned can be used for trading, buying goods also for exchanging into cash.
Pros And Cons Of Crypto Currencies
Since there has been a great trend on this crypto market … let’s see some of the advantages and disadvantages of this new crypto era that is on the rise!
PROS
1.DECENTRALIZED
Imagine A transfers ₹100 to B, this transaction cannot happen unless the bank authorize it which makes A and B to depend on the bank where the money is said to be centralized but in a crypto currency there is a direct transfer from A wallet to B wallet through encrypted transactions listed on blockchains which can be accessed only by the sender and receiver.
This makes the transaction free from bank cost, bank time to authorize is avoided, there is less time lag and many decentralized advantages.
2.BLOCKCHAIN
These crypto transactions follow blockchain technologies through which the transactions are encrypted and given as public accessible ledger which can be seen only by the participants of the transaction.
This makes it difficult for hackers to jump in and to know the stuff about the customers and easily accessible for customers to visit their transactions.
3.SECURED THROUGH ENCRYPTION
The data and the currencies are encrypted in the market through millions of different algorithms which makes it an impossible task for hackers to do frauds and makes it safe for the users .
This encrypted data can be viewed only by the users with the key they have for their own accounts which is nothing but usernames and passwords.
3. 24 HRS ACCESSIBILITY
Unlike the banks which work on a scheduled time cryptomarkets are open all 24hrs throughout the day and there will be no delay in the activities during late times as it runs on a global basis without boundaries and all these time for the nation’s differ from each .
4.GLOBAL NETWORK
This crypto network is globally connected to everyone. It makes transactions from one country to another free of cost as there are no different currencies for each nation.
“One currency for all”
5.HEDGE
Crypto currencies can be used in an efficient way for the purpose of hedging because there are various probability that the coin of a well evaluated currency will have an increase in its value in the future.
CONS
1.USED FOR ILLEGAL TRANSACTIONS
Knowing the advantage of the privacy of the crypto currencies which cannot be tracked or traced paves a way for the people who are into the illegal activities such as transactions for drugs, human trafficking are being made through dark web in crypto currencies. Also people convert their black money by buying crypto coins and mark a new origin for their investments which is legal now.
2.NO SECURITY IN CASE OF LOSS
Unless the physical investment which we do in the shares and assets holds some form of security in case the investment fails to succeed,the investment made in these digital assets cannot be secured as they are a form of strategic work we do rather than an investment. If we make a good study on the crypto market and make an investment then the gain is ours but if we play with it like a gambling then there are jo securities pledge for the losses we might face.
3.FLUCTUATIONS
The crypto market has a lot of fluctuations in it, one who invests the market must require a lot of patience until the coun is at its high price. If the coin falls one must have a required backup to meet his needs at that situation as a deep dependance on the crypto market can deceive us to vain.
4.INCREASE IN WASH TRADE PRACTICES
The coin makers nowadays to get immediate gains they buy their own coins which creates a rise in price of the coin , and this rise is been portrayed as an natural rise to the customer who invest on it and then once the value of the coin is as much as required the original makers withdraw their huge investment and runs away which gradually decreases the value of the coin leaving the influence investors as victims.
This can be avoided by validating the coins with our friends ans checking the currency’s white paper etc…
5.NEW COINS ARE UNTRUSTABLE
The new born coins are always hard to trust as they may have been from investors with wrong motives which can lead to the loss for the middle class customer who depends their life on it .
CONCLUSION
Crypto market is the new era of the economy? Yeah it is. But if it is still gonna be decentralized after all the scams and illegal practices going on then it must be considered to be restructured with proper regulations and laws .
