Along with the times, everything related to digital technology is indeed attracting attention, including those related to finance. Cryptocurrency is one of the results of technological innovation in the field of financial. Interestingly, in recent times crypto is very popular with many people, especially for investing. What exactly is cryptocurrency? And what are its functions?
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What is Crypto?
Quoting from Investopedia, cryptocurrency is a digital currency with cryptographic technology that makes its security very high. In fact, cryptocurrencies are almost impossible to fake. Actually cryptocurrency is not new because it has been around since 1983 and its creator is David Chaum. However, nowadays cryptocurrencies are back in popularity because many people are interested in making crypto investments.
Many think cryptocurrency is the same as blockchain. However, they are two different things. If cryptocurrency is a digital currency, blockchain is the technology for transactions of that digital currency. By transacting through the blockchain, all your data assets and transaction information will be safe because they will be spread across various computer networks.
What are the Functions of Crypto?
Crypto turns out to have various functions, you know. Thanks to its functionality, many people are finally interested in crypto. For you, what do you usually use crypto for?
1. Buying goods and services
Apparently, there are now many marketplaces that allow cryptocurrencies as a means of payment transactions, for example Overstock and Newegg. You can also use crypto to transact at several restaurants, hotels, applications, flights to bars, you know. In fact, some universities also enforce payments using cryptocurrencies. However, most of these companies still accept Bitcoin only.
2. Invest
Investment is one of the most popular functions of using cryptocurrencies among the people. The price of crypto has soared to a very high level. That's why many people suddenly become rich after investing in crypto. This method is also ogled by many people to get the same benefits. The more crypto users, the higher the price of the digital currency. You need to know, investing using crypto also has a high risk or high risk.
3. Mining
One of the most important functions in crypto is mining or mining in crypto. In mining you are required to solve difficult cryptographic puzzles. These puzzles are useful for confirming transactions and recording them into the blockchain. The better you are at doing calculations with a computer, the greater your chance to solve the cryptographic puzzle. When you successfully solve the puzzle, then you will get a reward or prize as a transaction fee.
Types of Crypto
Crypto has various types that you can find. Some of them may already be familiar to your ears, such as Bitcoin. However, there are still many types of cryptocurrencies that you need to know. Here are some types that are already popular!
1. Bitcoin
This is the first type of crypto and is still very popular today. Bitcoin itself existed in 2009 and Satoshi Nakamoto was the one who created Bitcoin. Over time, the name Bitcoin has skyrocketed and is widely traded. In fact, in November 2019 there were already more than 18 million Bitcoins. That's a lot, right! Until now as many as 68% of cryptocurrencies belong to the type of bitcoin.
2. Litecoins
This type of cryptocurrency has existed since the beginning of the emergence of cryptocurrencies, namely in 2011. This type of cryptocurrency is a P2P (peer-to-peer) digital currency. Litecoin has the advantage that the transaction process is shorter than other cryptocurrencies, which is around 2 minutes. You can use Litecoin to fulfill your daily transaction needs. Until now, Litecoin is also the mainstay currency for investors.
3. Dogecoin
Dogecoin is a crypto type derived from Litecoin which has a Shiba Inu dog mascot. Interestingly, Dogecoin is often used by people to do charities, donations, and other positive activities. However, this type of crypto has a much lower value than Bitcoin.
4. Bitcoin Cash
This type of crypto is in the top 5 of the list of the best cryptos. Slightly different from Bitcoin, Bitcoin Cash has several different rules. This type of crypto was launched in August 2017.
5. Feathercoins
This type of crypto is open source and has some similarities to Litecoin. Feathercoin was created by IT person named Peter Bushnell in 2013 and is under the MIT/X11 license.
Crypto Advantages and Disadvantages
After recognizing crypto and its various types, now is the time for you to know what the advantages and disadvantages of using crypto are. This is important so that you can also take into account the risks that you will get. Don't let you get trapped because you don't understand crypto as a whole. Here are some of the pros and cons of using crypto!
Advantages of Crypto
1. Universal
Cryptocurrencies are universal because the whole world can use these currencies to transact. Even people who want to use cryptocurrency do not need any conditions so that everyone can easily use cryptocurrency.
2. Hurry up
Unlike conventional banks in general, transactions using cryptocurrencies are relatively faster. If transactions between countries take more than 1 day, with crypto you only need a few minutes to 1 hour.
3. Transparent
Cryptocurrencies are known for their transparent processes. You can see all transactions that have been made using crypto. Even though it is transparent, the confidentiality and security of your identity is maintained because the display of all transactions only uses a unique code for the identity of the user.
4. Can be controlled
You can manage yourself and be responsible for all transactions in crypto. Because it does not use a third party as an intermediary, the transaction will be cheaper than conventional transactions.
Disadvantages of Crypto
1. There are still loopholes for crime
Of all the security that is guaranteed, but there is always a blemish for crime to occur. We will never know who is behind the cryptographic system. It is possible that there are individuals who use cryptocurrencies to transact to buy illegal goods.
2. Must remember password
You must remember your crypto password. If you forget, then you will also have the risk of losing all the digital money in your account.
3. Still considered illegal
There are still many countries that consider crypto illegal and do not apply to buying and selling transactions.
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