In Part-I of ‘A short guide on cryptocurrencies’, we provided an introduction to cryptocurrencies and also explained what controls their prices and where can we use them. In this second part, we will give more information on this form of secure money.
Why should we use cryptocurrencies instead of cash?
One of the most common questions asked is the reason why we should move to cryptocurrencies instead of using cash money?
- Cryptocurrencies can’t be counterfeited easily or reversed arbitrarily by the sender as it happens with card charge-backs.
- Cryptocurrencies are safer and provide secure transactions. This helps in eliminating the possibility of identity thefts. When you provide your credit card for payment through a merchant, you provide all the access to your credit card details online even if you perform a small amount of transaction. The credit card thus operate on a ‘pull’ type of basis while cryptocurrency operate on a push type of mechanism which allows holder to send exactly what is needed to be sent to a merchant and no other information.
- Settlement is immediate- In cryptocurrencies settlement eliminates the need of third party approvals like it happens when we purchase things like real property which involves third parties, delays, fees payment when done in cash.
- Low fees- There is no or very low fees for cryptocurrency exchanges since the miners are compensated by the network.
How are cryptocurrencies created?
Cryptocurrencies are generated through mining which employs computers to solve complex equations. It is not a hard task for those who understand coding. SHA-256, CryptoNote or CryptoNight are some algorithms which are used for the development of these currencies.
Cryptocurrencies are no doubt a great revolution in the field of digital payment system and offer numerous advantages over traditional cash system. If managed properly it will soon become a widely accepted alternative for traditional currency globally.