The Problem with Existing Payment Methods
The buying and selling usually processed through a bank or a credit card company. Commonly in these kinds of transactions a middle party would probably involve and it is important to protect the information from unauthorized parties. In other hand international payment gets a long time to proceed while the whole network depends on each and every entity which causes double spending.
These kinds of issues are no more! Thanks to cryptography, a special type of currency known as cryptocurrency came in to the discussion of e-money. Cryptocurrency can be identified as a promising method of securing information and transferring money through out of virtual network.
What's a Cryptocurrency?
Cryptocurrency is a virtual or a digital currency operates in a decentralized network based on a special type of virtual distribution database which is often called as a blockchain. Decentralized network holds a set of assets which is virtually connected throughout a large number of computers around the world. According to facts of decentralizing, no money transactions depend on a single central authority and it is not essential to have money in every intermediate as a typical money transaction. Block-chain is having the ability to keep the network configurations unhindered. The encrypting mechanisms used in block-chain technology provides a better satisfaction for the transactions in terms of security.
The system of cryptocurrency provides the security entities for the payments with virtual tokens. In peer to peer transactions these tokens are transferred between the seller and buyer instead of physical money. Now a days there are about one thousand six hundred of cryptocurrency methods including Ethereum, Chain-link, Monero and Litecoin while bitcoin remains as the first and the most popular cryptocurrency. Considering the worlds average value of cryptocurrency, Bitcoin has overcome around 70% of the total.
How Cryptocurrencies work?
In early stage of cryptocurrency, it has focused on military applications and later on it has moved for commercial applications. Following an online ledger for all the transactions, sharing information using an algorithm ensures the system efficiency and it provides a better potential to the virtual commerce. Due to the evolvement of cryptocurrency, it is capable of providing fast service for its users between the globe. Since the entire network is updated at once and no physical currency is involved to the transaction, always the middle party can be neglected. Furthermore, Cryptocurrency is secured by a code which holds by the user known as a public key and a private key. Those keys are useful in receiving cryptocurrency to the user account. This key is a unique code so that, no external stranger is allowed to spend out the user’s currency without any permission. Considering the economical advantages, cryptocurrency completely reduces processing fees of traditional online money transactions.
Disadvantages of Cryptocurrency
This virtual wallet holds few disadvantageous as well. Since the network is kind of anonymous, it provides a bit fortune to illegal activities such as laundering money which are related to criminal activities, drug related black money and tax liability. Losing the password or the key could lose all the money of the user account. But, managing these risks wisely may explore a new path for future trends of e-commerce.
According to the computerized structure of cryptocurrency, it cannot be exchanged between another physical currency. The market price of cryptocurrency completely depends and varies on supply and demand. Nonetheless, cryptocurrency is a fully safe method of selling, buying investing, exchanging money and it will be a global trend of future electronic money.