Cryptocurrency is a digital currency transferred and received without any central authority or regulation. Other than conventional currency, cryptocurrency has several unique features. These include transparency, non-stop and ultra-secure transfers and control by the users. However, cryptocurrencies have several flaws that make them inferior to conventional money.
Conventional money is a convenient tool used to transfer funds electronically. Most banks and financial institutions provide access to regular bank accounts for holding currencies. Customers don't need any special skills or knowledge to use conventional money. Cryptocurrencies, on the other hand, are computer software based on blockchain technology. They're not physical and cannot be held in hand. While cryptocurrencies have some advantages over conventional money, they have many weaknesses, too.
Central banks are now exploring ways to use digital currencies. They want to create their own digital currencies that can be controlled by regional authorities. This will help control inflation and maintain the value of the currency. In contrast, decentralized currencies like bitcoin have no central authority or control. No one knows who created these digital currencies, but they're gaining steam among global citizens.
As cryptocurrencies gain ground globally, there is a rise in criminal activity and fraudulent schemes. Exchanges run by criminals receive huge amounts of cash as people buy and trade digital currencies. Many operations involve the ‘cryptopunks' subculture and are automated using blockchain technology. This allows hackers to spread dishonest schemes online with ease. Some schemes involve sending out false product information or fake promotional codes for real merchandise. All of this leads to a poor reputation for cryptocurrencies that needs to be cleaned up.
Digital currencies can help central banks control inflation and ensure the value of the currency. However, there are several risks associated with cryptocurrency use by criminals. There's still much data needed to understand how best to regulate these new technologies.
Thanks for reading and don’t forget to subscribe to be up to date!
