You must be wondering what is this cryptocurrency and why is it gaining a lot of highlights in the present market. Well, you are not the only one who is not aware of the cryptocurrencies; there are many individuals, who still have not heard about the cryptocurrencies. Cryptocurrencies refer to digital currencies or online currencies.
These currencies have no physical presence as they are developed and used virtually. With the help of Blockchain technology, the creative developers have managed to code the programs for the cryptocurrency. Well, you can consider Blockchain technology as an innovative coding technology, which is specially maintained for the design of virtual or online currencies.
With the introduction of smart contracts in the digital industry, the demand for Blockchain technology got high moves. In 2010, Bitcoin was certified to be the first cryptocurrency for digital transactions. It was efficiently tested and experimented with the digital transactions and after that only it has been provided with the necessary permissions and certifications.
Necessary benefits associated with cryptocurrencies
Cryptocurrencies are also termed decentralized currencies as there is no centralized unit or body to control the flow of currencies. It can also be said that cryptocurrencies are a combination of technology and finance in the digital era. Recently, it has been observed that some private enterprises have started to accept payments or exchanges through cryptocurrencies.
They have specified and designed their cryptocurrencies and are greatly carrying forwarding the trend of cryptocurrency. China has also developed its cryptocurrency, and soon it is expected that the economy of China will be managed in a cashless manner. To grab more details regarding Cryptocurrencies, you can go through the below benefits keenly.
- Low inflation risk –
Inflation is one of the common issues, which is associated with conventional currencies. When the reserve bank prints more currencies, it is obvious that the purchasing power of the currencies will be reduced. And this is the phase where the term inflation got its definition.
Mainly, investors, traders, and business owners face difficulties because of inflation issues. But there is no risk of inflation with the cryptocurrencies, as they are not under the control of both government & Reserve Bank.
- Untraceable –
Cryptocurrencies are decentralized currencies; thus there is no involvement of any centralized unit. Every enterprise can create & develop its cryptocurrencies and can manage digital transactions. Thus, it is pretty difficult to trace the currencies.
- Portable –
With the concept of cryptocurrencies, it is feasible to carry a million dollars in the pocket. As these are digital currencies, you can simply store the cryptocurrency in a memory card and carry it in your pocket. Thus, the issue of carrying and transferring the big amount is greatly resolved.
- Simple and cost-effective –
The transaction & storage of cryptocurrencies is maintained without any intermediary. Thus, without waiting for any permission and paying any charge, it is possible to store and manage the transactions of cryptocurrencies.
- Reduced collapse risk –
The risk of collapsing is greatly associated with conventional currencies. When the government changes its trade policies or a situation of hyperinflation is developed, there is a high chance that the currencies will collapse their value. But in the case of cryptocurrency, no such situations are considered.
- Easy usability –
As cryptocurrencies are designed & developed with the help of digital technologies, it is very convenient to manage the transactions of cryptocurrency. Again, no technical skills are required to deal with cryptocurrencies. Simply online transfer or transaction techniques are used for the cryptocurrencies.
- Safe & secure –
Though the cryptocurrencies are developed on an open-source platform, it is easy to steal the logic of cryptocurrencies, but for the safety of the clients & customers, the experts have also designed different secured platforms for the transaction of the cryptocurrencies.
Limitations of Cryptocurrency adoption
Considering all the above benefits, the concept of cryptocurrencies seems cool and effective. But do you think, it is feasible for cryptocurrencies to adapt to the present market? To decide the feasibility, some important obstacles to cryptocurrency are discussed below.
- Validation –
It is very important to ensure proper validation of a product before it is introduced to the market. For now, the transactions of cryptocurrencies are very low in the market. Thus there is no sign of any errors or issues. But when the transactions are more, it’s obvious that different problems will be visible on the surface.
In such cases, it is necessary to validate the benefits of cryptocurrencies. Again, it has also been observed that there are certain limitations of Blockchain development technology and because of those limitations, there are high chances that the cryptocurrencies will also have the same limitations.
- Regulations –
Yes, it is very much true that there is no success without a regulating body. And probably this is the main limitation of cryptocurrencies. As there is no regulation on the developments of Blockchain technology, there are also no regulations on the transaction of cryptocurrencies. Thus, it will be very difficult to manage the auditing process of the transactions. Again, if there will be any issue during the storage and transaction of cryptocurrency, then who will be responsible for that?
- Standards –
Because of open-source platforms, there is no specific standard for cryptocurrencies. Thus, it indicates that, if anyone wants, then he/she can easily modify the logic & concept of cryptocurrencies according to their convenience. In such cases, it is obvious that there will be a lot of confusion and problems with cryptocurrencies.
Yes, it is very much true that the above obstacles are practical, but again, it is also true that cryptocurrencies will greatly ensure a cashless economy. Each & every product has its limitations, but it doesn’t bother the advantages. It is highly predicted that the experts will find some way to fix the limitations of Blockchain technology & cryptocurrencies shortly.
