Not everyone knows about Cryptocurrencies. This is a form of digital money that not a lot of people are aware of. This currency is greatly associated with internet using cryptography as security. This is commonly known as virtual currencies. The first crypto currency was Bitcoin, which was created in 2009 by Satamoshi Nakamoto.
The government has no full control of the cryptocurrencies, unlike the centralized banking. But their security is very tight that it is difficult to counterfeit. When you are new to cryptocurrencies, it can be confusing and mind boggling how this system works. Let’s break it down and learn the benefits and disadvantages to fully understand it.
Cryptocurrency Benefits and Drawbacks.
When you transfer cryptocurrency between two parties, the transaction is easy. The fund transfers are charged at the lowest rate unlike what most banks and financial institutions do for wire transfers. Bitcoin uses a blockchain to store an online ledger which ha the transaction history with Bitcoin. More financial institutions are seeing cryptocurrencies to have a potential in lowering transaction costs through more efficient payment processing.
However, cryptocurrencies are virtual. There’s no central repository. If a hacker is able to get through the system, everything will be wiped out if there are no back copies. The prices depend on the supply and demand, so the cryptocurrency conversion rates can fluctuate.
Cryptocurrency: Price vs Value
There are some factors that affect the price of cryptocurrency. Here are some of the factors that affect the changes:
- Supply and demand.
- Electricity used to secure the blockchain.
- Blockchain security level
- How the currency is used, and if it can be used.
- How the public sees cryptocurrency
- Price of Bitcoin affects the price of other cryptocurrencies.
- Media reports whether positive or negative.
- Investors have the hold in manipulating the price.
- Market dilution which affects new cryptocurrencies.
- The traditional systems.
- Legal and Governmental issues.
The fluctuating prices of Cryptocurrencies can be very scary sometimes. If you are new to this, you can click here to check our cryptocurrency conversions, And before investing, it is best to do your own research on how the market works. Never get excited about how much you can profit. Take everything slowly until you gain experience.