Current payment transaction tools have undergone many developments. By purchasing products via the web, you will exit without having to use paper currency. Cryptocurrency is one of the digital currency assets as an answer to the needs of today’s online financial transactions.
Well, for those of you who still don’t know what cryptocurrency is, in this article we will discuss more deeply about the meaning, function, type, and workings of this digital currency. First, we will discuss the correct definition of . cryptocurrencies.
What is Cryptocurrency
Cryptocurrency may be a digital asset known as a digital currency. This currency is very different from the traditional version, where Cryptocurrencies are used for virtual transactions over the web. The currency is decentralized, which means that there are no intermediaries during transactions. So, payments occur on a peer-to-peer basis, which means that they are managed between the sender and receiver directly. In addition, all transactions will be recorded through a system that is already available with optimal security. Because it is decentralized, cryptocurrencies require sophisticated and capable computer specifications. generally, will use a blockchain platform to facilitate transactions.
Digital Currency Function
Next, enter the subject of the virtual currency function. Here we have divided into two kinds of functions related to human activities today.
The principle of cryptocurrency is the same as the principle of economics, where its value will rise when there is a lot of demand. The more people who invest, the value will also soar. However, the investment is included in the category of high risk (risk tall).
- Buying Goods or Services
Currently, many companies or organizations have implemented payment tools using virtual currencies, from hotels, flights, restaurants, to applications. At least, there are two companies that have used this transaction tool, namely Overstock and Newegg. However, most companies only accept bitcoins.
Mining is some of the things that are closely related to cryptocurrencies. Users need to be ready to solve complex cryptographic puzzles in order to be ready to confirm transactions and records over the blockchain. The greater the user facility, the greater the prospect of having the ability to parse it.
Types of Cryptocurrencies
Next, go into the fabric about the types of cryptocurrencies that are often used in various countries as a means of web transactions. And here is the explanation.
Bitcoin is probably the type of cryptocurrency that was first used and is very popular until now. Bitcoin first appeared in 2009 by a celebration called Satoshi Nakamoto. As of November 2019, there have been more than 18 million bitcoins traded with a total market value of around US$146 billion. To date, approx. 68% of cryptocurrencies are bitcoins.
BitcoinCash was first launched in August 2017. It was launched because, there are various groups of bitcoin users who do not agree with the applicable rules. They broke away from bitcoin and improvised on the new digital currency, claiming that bitcoincash is better than bitcoin.
Feathercoin may be a kind of open source cryptocurrency. It was first created by Peter Bushnell, who works as an IT Officer at Brasenose College, Oxford University in April 2013. Feathercoin is also analogous to Litecoin and is under the MIT/X11 license.
Dogecoin itself may be a derivative of litecoin which was first introduced in December 2013. As the name implies, dogecoin uses the Shiba Inu dog as its mascot. Dogecoin is one of the friendliest cryptocurrencies, due to the large number of communities doing charity work, donating, and other positive activities. in addition, dogecoin also has a lower value than bitcoin.
Litecoin was introduced in 2011 as a peer-to-peer (P2P) digital currency that generates new blocks at a faster rate. Litecoin also allows for fast transactions without the need for a powerful computer system.
How Cryptocurrency Works
Here are some ways related to how to use online cryptocurrency payments.
- Transaction activity
If you routinely do cryptocurrency mining, then you will actually use virtual currency for various kinds of transactions. starting from activities in the exchange market by exchanging conventional currencies with bitcoins. Then private output with a note, the company where you transact has provided currency payment facilities in digital form.
Then massive fundraising or crowdfunding to attenuate transaction costs if the project that has been financed fails. Cryptocurrency exchange markets that you will find in America are, ICE (Intercontinental Exchange), CME (Chicago Merchant Exchange), and CBOE (Chicago Board Option Exchange).
- How to determine the value of currency
Cryptocurrencies are made from well-encrypted and unique cryptography. You need to know, the value of each type of cryptocurrency is the same as financial products, where when the demand is high enough with fewer miners, the value of the cryptocurrency will increase.
Which means, the value of cryptocurrencies is volatile and can fluctuate up or down supported by supply or user confidence. The highest ranking cryptocurrency currently is bitcoin and followed by Etherium.
Advantages and Disadvantages of Cryptocurrency
Next is the last material on the advantages and disadvantages of virtual money.
Following are some of the benefits that cryptocurrencies have.
Where. Its characteristics, everyone can use without binding cryptocurrency any regulations and conditions.
With digital currency, every user can see the distribution of transaction activity that has been carried out. This transparency, of course, also has limitations where you cannot see the party making the transaction.
Have control over privacy
This means that each user or users will be responsible for their respective currencies.
Fast and accurate
Finally, transactions using virtual currencies are fairly fast when compared to transactions through banks.
- Disadvantages The
following are some of the disadvantages of using virtual-based currencies.
have not received a full license
in some countries still do not allow this currency and is still considered illegal. So, for some countries, cryptocurrencies do not act as legal tender for web payments.
Opening security loopholes
Many people take advantage of cryptocurrencies for malicious purposes. they will carry out illegal transactions without being noticed by exploiting loopholes in the cryptographic code.
If you do not memorize or forget your password, there is a great risk of losing money on the created account.
Cryptocurrency is a digital asset in the form of digital currency such as buying and selling products or services through internet-based computer devices.
There are many types of digital currencies, including bitcoin, litecoin, dogecoin, feathercoin, and bitcoincash.
The function of cryptocurrency is to carry out shopping and buying and selling activities online, mining, and as a means for investment.