Cryptocurrency? Say what?
Cryptocurrencies, especially Bitcoin, have been in the news and media for quite some time now.
In general, there are 6,700 types of cryptocurrencies that are in circulation, with bitcoin being the most popular amongst the cryptocurrencies with a current market value of $421.7 billion.
Cryptocurrencies are not regulated by any existing authority (yet) and their inherent value is based on speculation. Since they are majorly traded for-profits, most players bank on an upward trajectory to cash in when the graph is favorable.
But other institutations are also getting into the game. Crypto payment options have recently hit the market, with several companies developing their currencies known as tokens to use in trading for goods and services the company produces.
It’s only a matter of time, until cryptocurrencies become a mainstream payment and saving options.
Advantages of using Cryptocurrency
- Autonomy; Using Cryptocurrency allows the complete user control over their expenditure and funds. This mode of payment eliminates the aspect of dealing with the banking systems and government. This is the most appealing advantage of using Cryptocurrency as you are not explainable to anyone the number of funds you have stored or using.
- End to end encryption; the payment system is strictly user to user. This means that only users are able to transact with each other without approval from an external authority. There are also sites that can mix your bitcoins to further improve privacy. These are called crypto tumblers and they work to hide your identity when sending bitcoins to someone else. These are good if you want to stay 100% anonymous.
- Banking fees; this mode of payment does not have any form charges similar to banking charges like overdrafts and account maintenance fees. Only minor transactional fees are applied if you send bitcoin to a friend etc.
- Mobility and Accessibility; being an online payment system, the user can make payments from any location with internet access. With the increased use of the mobile smart device, users can easily access their bitcoin wallets from any of their devices.
Disadvantage of Cryptocurrency
- Cybersecurity; is the major concern with online modes of payment. They are located on a digital platform, and cryptocurrencies are susceptible to hackers who could cause a loss of funds.
- Lack of inherent value; Cryptocurrency lacks the ability to directly link its value to a given asset, causing price volatility. This makes its value solely based on speculation.
- Regulations; Lack of regulations from existing authorities has rendered this mode of payment a high-risk investment for stakeholders.
- Scalability; use of Cryptocurrency has been on the rise. However, this means it still faces stiff competition from global payment companies like MasterCard and VISA.