The Case for Cryptocurrency: 4 Reasons Why You Should Use Cryptocurrency

The meteoric rise of Bitcoin over the past year has led to the mass adoption of cryptocurrency among retail and institutional investors. According to a new Pew Research Center survey, the vast majority of U.S. adults have heard at least a little about cryptocurrencies like Bitcoin or Ether, and 16% say they personally have invested in, traded or otherwise used one.

Bitcoin is the world’s first cryptocurrency ever created. As of January 2022, there are more than 8,000 cryptocurrencies in existence. Cryptocurrency is a modern-day digital asset or virtual currency designed to work as a medium of exchange. Built on blockchain technology, most cryptocurrencies are secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.

Despite a lot of skepticism, cryptocurrencies offer some real benefits including easy transactions, incredible security, short settlement times, and many more. From Bitcoin, Litecoin, Ethereum, and Floki Inu, this article discusses some of the main reasons you should consider using cryptocurrencies whichever you should choose.

Cryptocurrency is Owned by Everyone

The function of cryptocurrency is pretty much like any traditional national currency, but there are a few fundamental differences.

To really gain a good appreciation for cryptocurrency, it’s important to understand that most modern paper currencies are fiat currencies. Major global currencies including the U.S. dollar, the euros are typically declared by government decree (fiat) to be legal tender.

Fiat currency is a government-issued currency that gives banks greater control over the economy since they control how much money is printed. Most modern-day paper currencies we know today are fiat money. Since fiat money is created and regulated by governmental bodies (centralized), it represents debt. In contrast, cryptocurrency represents itself, and its value is determined by what someone is willing to pay for it. Since cryptocurrency is decentralized, nobody owns or regulates it.

Some may view this lack of centralization as risky, but like stocks and bonds, cryptocurrency is an asset class that comes with risks.

Since fiat currencies are centralized and managed by a single entity, they are exposed to human manipulation and government corruption. In contrast, cryptocurrencies are decentralized and operate on the blockchain (a distributed ledger). Blockchain is a secure decentralized database with auditing capabilities. This means the state of cryptocurrencies remains transparent. This leads us on nicely to our next point.

Cryptocurrency Is Almost Impossible to Forge

A blockchain is a distributed ledger, and it is what cryptocurrency operates on. Understanding blockchain technology will help you understand and harness the power of digital currencies. Breaking it down, the “block” is composed of chunks of encrypted data. The “chain” is the public database in which the blocks are stored and sequentially related to each other.

The “block” is composed of chunks of encrypted data. The “chain” is the public database in which the blocks are stored and sequentially related to each other. Each block in the blockchain has a unique code called a hash. The blockchain is distributed worldwide and spread among thousands, or in Ethereum and Bitcoin’s case, millions of computers.

If someone wanted to hack a cryptocurrency, they would have to forge a single block of data in the chain; and to do that, they would have to manipulate all the blocks from a single point in history and update all the computers which have copies of the blockchain. In short, it is virtually impossible due to the power and money needed to do it successfully.

Cryptocurrency Transactions Are Confidential

Traditional currencies issued by governments allow you to make private transactions or pay for something in person using physical cash. Large withdrawals of money are quickly flagged and reviewed by central authorities like governments and financial system regulators. This is good since it upholds the legitimacies of traditional currencies and deters criminal enterprises like money laundering.

Cryptocurrency is different as it relies on well-crafted math to track the exchange between two people or companies. While the ledger (blockchain) allows transactions to be publicly viewable, the exchanging parties are more private. Cryptocurrencies are effectively held in digital wallets, and each wallet owner has a private key to their wallet. The owners of wallets remain anonymous on the blockchain. Importantly, there is advanced forensics that can uncover wallet holders’ identities which have encouraged crypto projects like Monero to be resistant to such discovery.

The Security of Cryptocurrency Grows Through Time & Value

Above, we discussed the scarcity of hacking since it requires enormous power and money to control the computer networks involved in the more evolved coins such as Bitcoin or Ethereum. For large coins, their networks are vast and extensive, hacking is mostly impossible. In contrast, newer cryptocurrencies haven’t grown as much and therefore would be considered more vulnerable since their blockchains aren’t as big. It’s something to consider when investing in cryptocurrency – the bigger the blockchain, the more protection you have.