Cryptocurrency is a global term that is still not understood by most people, banks, governments and many companies. Many thought that this was one of the ephemeral phenomena that would fail in a few years, but this has not materialized to this day. Cryptocurrencies are an increasingly topical topic in the world of finance and refer to a wide range of technological achievements that use a technique known as cryptography. Cryptography is an information protection technique by turning it into an illegible format that can be deciphered by whoever possesses the secret key. Cryptocurrencies such as bitcoin are secured using this technique with a system of public and private digital keys.
Establishing the definition of cryptocurrencies is not easy and a number of different approaches to defining them are found in the literature. A cryptocurrency can be defined as “some system that uses cryptography to enable the secure transfer and exchange of digital tokens in a distributed and decentralized manner, whereby these tokens can then be exchanged for standard currencies at their usual market values.” Cryptocurrency is a digital or virtual currency that uses cryptography for security purposes. Cryptocurrency is difficult to counterfeit because of its security feature. The main, and probably its most attractive feature is reflected in the fact that it is not issued by any central body, which theoretically makes it immune to government interference or manipulation.
The Oxford Dictionary defines cryptocurrency as “a digital currency that uses coding techniques to regulate the creation of units of money and verify the transfer of funds, and which operate independently of the central bank.”
Cryptocurrency is considered a subtype of alternative currencies, more precisely digital currencies. Cryptocurrencies are mostly created by their users through a process known as “mining.” In 2009. Bitcoin became the first decentralized cryptocurrency, and since then numerous other cryptocurrencies have emerged.
One of the main advantages of cryptocurrencies is anonymity because transactions are recorded in the public ledger (blockchain). This means that such data can be reviewed by anyone at any time. This is especially attractive for those who want a more transparent banking system. It is because of this transparency that cryptocurrencies are one of the main topics in the world of currencies. Furthermore, buying cryptocurrencies is instant and available 24 hours, i.e. it is possible to make a payment wherever someone is. It is not even necessary to have a computer to use cryptocurrencies. Everything can be done through mobile devices, which means that even those who do not understand too much about technology can access their finances and make decisions instantly.
The cryptocurrency is completely anonymous which is great for those who valuenline privacy and who reluctantly give too much of their own digital data. Anonymity also carries with it the threat of fraud. The black market and the dark web are big users of cryptocurrencies. Criminals obviously appreciate their anonymity as well as the ability to send huge sums of money anywhere in the world via mobile devices. Honest citizens find anonymity attractive mostly because of the fact that there is no possibility of identity theft.
The main drawback of cryptocurrencies is the fact that it is difficult to understand how they work. The idea of a decentralized financial system can be a challenge, especially if someone is not sufficiently computer literate. Consequently, people are very careful when it comes to taking advantage of the benefits that cryptocurrencies offer. There are a number of ways cryptocurrencies can be used, and most people currently use them as a means of investing. More ardent cryptocurrency users buy tickets to sporting events, even houses, and other assets, but most are simply waiting to benefit from drastic market fluctuations.
