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What is Crypto Currency? Advantages and Disadvantages

The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
A cryptocurrency is a digital currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

The very first cryptocurrency was Bitcoin, which still remains the most popular and most valuable. Today, there are thousands of alternate cryptocurrencies with various functions and specifications.

Usage:
It has no physical existence even then you can use it to make purchases online, buy goods or services, but it’s not a form of payment with mainstream acceptance quite yet. If you’re trying to pay a person or retailer who accepts cryptocurrency, you’ll need a cryptocurrency wallet, which is a software program that interacts with the blockchain and allows users to send and receive cryptocurrency.
Much of the interest in these unregulated currencies is to trade for profit, with speculators at times driving prices skyward.

Advantages:

Anonymity and data protection have been the main concern of cryptocurrency. One can create crypto currencies addresses without reference to personal information (name or address).

The transaction fees are very low and sometimes you can even have a cryptocurrency exchanged without fees.

The increasing demand will result in an increased value, thus keeping up with the market – and limiting the risk of inflation.

Disadvantages:

The volatility in cryptocurrency can be hard to handle, especially for investors and amateur traders who don’t have much knowledge in the domain and can lead to losses of funds.

Anonymity and decentralization make it very hard for the government to track down users, and could be used for money laundering and by criminals.

One of the biggest cons is that there is no refund policy for cryptocurrencies: if you mistakenly pay someone, there is nothing to guarantee your money back.

How to Buy:

To buy cryptocurrencies, you’ll need a “wallet,” an online app that can hold your currency. Generally, you create an account on an exchange, and then you can transfer real money to buy cryptocurrencies such as Bitcoin or Ethereum.

Are cryptocurrencies a good investment?

Cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did. That’s what’s called “the greater fool” theory of investment. Contrast that to a well-managed business, which increases its value over time by growing the profitability and cash flow of the operation.

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