Cryptocurrency is a digital asset that is primarily used as a transaction medium to secure financial transactions, control the creation of additional assets, and verify any transfer of assets with the help of strong crypto technology. It is also known as a form of digital currency or virtual currency. Unlike central banking systems, it is a decentralized control and financial transaction system that works through a blockchain that is mainly used for financial transactions.

The first decentralized virtual currency that was developed in 2009 is Bitcoin, known as a virtual currency unit and it works independently without the help of any central bank or administrator. Since then, around 4,000 altcoins of various bitcoin variants have been developed. Bitcoin is considered a peer-to-peer electronic cash system in which users transact directly without intermediaries.

Blockchain is a data file consisting of numerous blocks that keeps records of all previous bitcoin transactions and also the creation of new ones. The normal average time between each block is about 10 minutes. The most frequent use of bitcoin is compatible with external software called the Bitcoin wallet. By using this software, one can easily store, receive and manage the transaction of bitcoin units. To transact with bitcoin, you need to have an account with any of the bitcoin exchanges around the world and you need to transfer fiat currency to that account. Therefore, the account holder can make future transactions using these funds. Besides bitcoin, some of the other source of cryptocurrency is the petro, which is mainly used for oil and mineral reserves.

There are some pros and cons associated with using digital currency. The main benefits of using a virtual currency are the following: –

• Provides a fast layer of transparency: –

Bitcoin generally operates with the help of a ledger called the Blockchain that records and monitors each and every transaction. Once a transaction is made and posted to this ledger, it is considered static. These transactions can be verified at any time in the future and therefore, in addition to this, it also guarantees security and privacy regarding all transactions made through a particular account.

• Fast processing and portable use: –

Billions of dollars in bitcoins can be easily transferred from one place to another without any detection with the help of a single memory unit. When carrying out any type of transaction, the participation of third parties can be eliminated through the use of this bitcoin technology. This will result in a quick and easy transaction without third party approval,

• Low transaction costs involved: –

The transaction costs involved in exchanging these digital currencies are very less, which makes it more affordable than the real currency for the population of the entire world. Therefore, the cost of any type of transaction carried out is much lower, which turns out to be an advantageous characteristic for the population when carrying out any transaction.

• Combat and eradicate poverty: –

Often times, banking systems and financial institutions do not provide help or assistance, especially to the backward classes in rural areas. Bitcoin serves as an alternative in such cases where it extends its robust financial services to anyone with internet access. It often serves as a support for the poor and oppressed classes who in most cases are offered no viable alternative.

As a newer or more recent technology arrives, there are some negative factors also associated with its use, which are as follows: –

• Ignorance and distrust of the population: –

Due to the lack of knowledge about the digital currency, people are more likely to be wary of its widespread use. Therefore, there are very few trading systems that accept these cryptocurrency sources, limiting the trading systems that prefer to use virtual currency in their day-to-day transactions.

• Non-traceable transactions: –

Since transactions made by bitcoin are untraceable, it provides a space for criminal transactions. In such cases, drug traffickers and scrupulous people are the ones who make use of said virtual currency so that their illicit activities are not easily detected.

• Volatile nature and uncertainty: –

Cryptocurrency is volatile at times and continues to change frequently on a large scale. Sometimes people make a great deal of money when the market rates of these virtual currencies skyrocket, and sometimes they also face huge losses when the price plummets.

Cryptocurrency is an innovative but hobbyist concept that can potentially disrupt the entire financial market. It is true that this digital currency has captured the world’s attention in a short time. There are always advantages and disadvantages to every new technology that comes out on the market. To get the most out of it, you need to examine both sides before making any decisions.