Cryptocurrencies and Issues | Indian Economy | Civil Service Malayalam

What is cryptocurrency and blockchain technology? benefits and drawbacks of cryptocurrency

Cryptocurrency

What is Cryptocurrency?

• A cryptocurrency, also known as crypto, is a digital currency that is protected by cryptography.
• Individual ownership records are stored in a computerised database. 
• it is intended to function as a medium of exchange.
• Because they are not issued by a government agency in any country, they are immune to interference and manipulation.
• The first type of crypto currency was Bitcoin
• Cryptocurrencies don't have a central issuing or regulating authority, instead use a decentralized system to record transactions and issue new units.
• It is supported by a decentralized peer-to-peer network called the blockchain.

The competing cryptocurrencies that were created as a result of Bitcoin’s success are known as altcoins. Some of the well known altcoins are as follows:

1. Litecoin
2. Peercoin
3. Namecoin
4. Ethereum
5. Cardana

Benefits of Cryptocurrency

The following are the benefits of cryptocurrency:

• It will be simple to transfer funds between two parties without the use of a third party such as credit/debit cards or banks.
• It is a less expensive option than other online transactions.
• Payments are safe and secure, with an unrivalled level of anonymity.
• Only a public key and a pirate key can access a user's "wallet" or account address in modern cryptocurrency systems. Only the wallet owner has access to the private key.
• Fund transfers are completed with minimal processing fees.

Drawbacks of Cryptocurrency

The following are the drawbacks of cryptocurrencies.

• Because cryptocurrency transactions are almost invisible, they are ripe for illegal activities like money laundering, tax evasion, and possibly even terror financing.
• Payments are irreversible
• Cryptocurrencies are not widely accepted and have limited value in other places.
• There is concern that cryptocurrencies such as Bitcoin are unrelated to physical goods. 
• According to some research, the cost of producing a Bitcoin, which consumes an increasing amount of energy, is directly related to its market price.