Cryptocurrencies that have emerged as digital alternatives to traditional methods of exchange have also provided alternative perspectives. In this article, we’ll be looking at the more advantages of cryptocurrencies. We also consider the plus points that make it a workable alternative to more established forms of financial trade.
There’s the school of thought which sees cryptocurrencies as a financial medium for fraudsters, terrorists, and criminals. Especially given their involvement in ransomware scams, and in trading on the Dark Web.
On the other hand, recent upsurges in the value of Bitcoin have established cryptocurrency as a viable investment which – with the positive hype surrounding the Blockchain technology that backs it up – can have a positive impact on the wallets and trading practices of mainstream investors, worldwide.
What is cryptocurrency?
Cryptocurrency is a type of digital currency that cryptography identifies. This is a network that will distribute across a large number of computers, making it almost impossible to counterfeit or duplicate it. It is a system that allows for online secure payments, which denominate in virtual tokens.
It works on decentralized networks that work on blockchain technology, a system of recording the knowledge exceedingly; that makes it very difficult or impossible to vary or cheat the system. This structure allows them to exist outside the control of governments and regulatory authorities.
Cryptocurrencies became a worldwide phenomenon during the talk that they are visiting to replace general currencies within the near future. Cryptocurrencies adoption continues to understand momentum partially due to the world’s progression towards a cashless society.
The fact that some people today transact through electronic money still confirms the suggestion that digital currencies can be long-term currencies. However, due to strong opposition from regulators around the world, it will be slow to work before they find their way to the mainstream.
With the industrialization and intervention of technology, digital currencies are gaining a better position than others. One of these currencies is Bitcoin. Many people are accustomed to this well-known term. Through digital currency, it is easier to transfer funds directly between the two parties. It does not need a trusted third party like any other bank or institution. Now let’s see what the advantages of cryptocurrencies are.
What are the advantages of Cryptocurrencies?
In traditional business dealings, brokers, agents, and legal representatives can add significant complication and expense to what should otherwise be a straightforward transaction. There’s paperwork, brokerage fees, commissions, and any number of other special conditions which may apply.
One of the advantages of cryptocurrencies transactions is that they are one-to-one affairs, taking place on a peer-to-peer networking structure that makes “cutting out the middle man” a standard practice. This leads to greater clarity in establishing audit trails, less confusion over who should pay what to whom, and greater accountability, in that the two parties involved in a transaction each know who they are.
One financial analyst describes the cryptocurrency blockchain as resembling a “large property rights database,” which can on one level be used to execute and enforce two-party contracts on commodities like automobiles or real estate. But the blockchain cryptocurrency ecosystem may also be used to facilitate specialist modes of transfer.
For example, cryptocurrency contracts can design to add third-party approvals, make reference to external facts, or be completed at a specified date or time in the future. And since you as the cryptocurrency holder have exclusive governance of your account, this minimizes the time and expense involved in making asset transfers.
More Confidential Transactions
Under cash/credit systems, each time you make a transaction, the entire transaction history may become the reference document of the relevant bank or credit agency. At its simplest level, this may include checking your account balance to ensure that sufficient funds are available. For more complex or critical transactions, you may need to take a closer look at your financial history.
Another one of the great advantages of cryptocurrencies is that each transaction you make is a unique exchange between two parties, the terms of which may be negotiated and agreed upon in each case. In addition, the exchange of information is based on “push”, whereby you can send exactly what you want to the recipient.
This protects the privacy of your financial history and protects you from the threat of account or identity theft. It is more common in traditional systems, where your information may be exposed anywhere in the transaction chain.
You have no doubt read your monthly statements from the bank or Credit Card Company. And have avoided the costs of writing a check, transferring money, or breathing in the general direction of the financial companies involved. Transaction fees can destroy a significant amount of your assets. Especially if you do a lot of transactions in one month.
Data miners who perform the numbers generated by bitcoin and other cryptocurrencies receive compensation from the cryptocurrencies involved. So transaction fees will not usually charge.
There may be some external fees involved if you engage the services of third-party management service to maintain your cryptocurrency e-wallet, but another one of the advantages of cryptocurrencies is that they are still likely to be much less than the transaction charges incurred by traditional financial systems.
Greater Access to Credit
Digital data transfer and the internet are the media facilitating the exchange of cryptocurrencies. So these services are potentially available to anyone who has a viable data connection, some knowledge of the cryptocurrency networks on offer, and ready access to their relevant websites and portals. And this is one of the advantages of cryptocurrencies.
There are currently 2.2 billion individuals across the world who have access to the Internet or mobile phones. But don’t currently have access to traditional systems of banking or exchange. The cryptocurrency ecosystem holds the potential to make asset transfer and transaction processing available to this vast market of willing consumers – once the required infrastructure (digital and regulatory) is put in place.
Easier International Trade
Though largely unrecognized as legal tender on national levels at present, cryptocurrencies by their very nature are not subject to the exchange rates, interest rates, transactions charges, or other levies imposed by a specific country.
Using the peer-to-peer mechanism of blockchain technology, cross-border transfers and transactions may conduct without complications over currency exchange fluctuations, and the like.
In a traditional banking or credit card system, you effectively turn stewardship of your funds over to a third party that can exercise the power of life or death over your assets. Accounts may close without notice for infringements of a financial institution’s Terms of Service – requiring you as the account holder to jump through hoops to get yourself back into the system.
Perhaps the greatest of all advantages of cryptocurrencies is that unless you’ve delegated management of your wallet over to a third-party service, you are the sole owner of the corresponding private and public encryption keys that make up your cryptocurrency network identity or address.
There are currently over 1200 unique cryptocurrencies or altcoins in circulation worldwide. Many are quite ephemeral, but a significant proportion has been created for specific use cases. It illustrates the flexibility of the cryptocurrency phenomenon.
For example, there are “privacy coins” which help mask your identity on the blockchain. Also, there are supply chain tokens that can facilitate supply chain operations for various types of industries.
Once a cryptocurrency transfer has been authorized, it can’t be reversed as in the case of the “charge-back” transactions allowed by credit card companies. This is a hedge against fraud. It requires a specific agreement to be made between a buyer and seller.
Finally, strong encryption techniques will employ throughout the distributed ledger (blockchain). Cryptocurrency transaction processes are a safeguard against fraud and account tampering, and guarantors of consumer privacy.
Advantages of cryptocurrencies: The rise of using cryptocurrency in business
An increasing number of companies worldwide are using bitcoin and other digital assets for a host of investment, operational, and transactional purposes. As with any frontier, there are unknown dangers, but also strong incentives. Explore the kinds of questions and insights enterprises should consider as they determine whether and how to use digital assets.
What can crypto do for your company?
To spark your company’s thinking about crypto, here are some of the rationales behind why some companies are currently using crypto:
- Crypto may provide access to new demographic groups. Users often represent a more cutting-edge clientele that values transparency in their transactions. One recent study found that up to 40% of customers who pay with crypto are new customers of the company. Their purchase amounts are twice those of credit card users.
- Introducing crypto now may help spur internal awareness in your company about this new technology. It also may help position the company in this important emerging space for the future. It could include central bank digital currencies.
- Crypto could enable access to new capital and liquidity pools through traditional investments.
- Crypto furnishes certain options that are simply not available with fiat currency. For example, programmable money can enable real-time and accurate revenue-sharing while enhancing transparency to facilitate back-office reconciliation.
- More companies are finding that important clients and vendors want to engage by using crypto. Consequently, your business may need a position to receive and disburse crypto to assure smooth exchanges with key stakeholders.
- Crypto provides a new avenue for enhancing a host of more traditional Treasury activities, such as:
- Enabling simple, real-time, and secure money transfers
- Helping strengthen control over the capital of the enterprise
- Managing the risks and opportunities of engaging in digital investments
- Crypto may serve as an effective alternative or balancing asset to cash, which may depreciate over time due to inflation. Crypto is an investable asset, and some, such as bitcoin, have performed exceedingly well over the past five years. There are, of course, clear volatility risks that you need to thoughtfully consider.
Advantages of cryptocurrencies: Conclusion
Using cryptocurrency could offer opportunities for some businesses. The benefits may include:
- A cryptocurrency transaction is generally a quick and straightforward process. For example, Bitcoins can transfer from one digital wallet to another, using only a smartphone or computer.
- Every cryptocurrency transaction will record in a public list called the blockchain, which is the technology that enables its existence. This makes it possible to trace the history of Bitcoins. It is to stop people from spending coins they do not own, making copies, or undoing transactions.
- Blockchain aims to cut out intermediaries, such as banks and online marketplaces, which means there are no payment processing fees.
- Cryptocurrency payments are becoming more widely used, amongst large organizations, and in sectors including fashion and pharmaceuticals.