Can Cryptocurrencies Fulfil The Functions Of Money The recent popularity of cryptocurrencies has made many people more interested in learning about this new digital asset? And a recurring question among this growing number of new investors is what are the advantages of using cryptocurrencies? Or also, why are they so popular? In this article, we will try to answer the first question and present some of the main advantages of using cryptocurrencies.
When cryptocurrencies were created, no one thought of the rapid and overwhelming growth that this new type of crypto asset would experience. Nor was it the acceptance and the enormous expectation that it was going to generate in public. For many, the fever induced by the irruption of cryptocurrencies in the financial markets is comparable to the famous gold rush of the last century, but with the digital tools and technology of this century. These cryptocurrencies are also born from mining.
What are Cryptocurrencies?
Before discussing the advantages of using cryptocurrencies in finance, we must understand these new assets very well. Without fear of being wrong, we can say that cryptocurrencies are a unique, decentralized, intangible means of payment. Cryptocurrencies are presented as an alternative to the use of traditional money or fiat money. It can fulfil the same functions as conventional money but ris
Why are Cryptocurrencies Created?
Cryptocurrencies are created to satisfy specific needs that have been hitting the financial world for a long time. Bitcoin is the first and most famous of the cryptocurrencies. It was launched on the market in 2009 by a developer known under the pseudonym Satoshi Nakamoto. It was thought and designed to allow the payment of electronic money directly from one person to extra, without the need for a chief authority to validate this transaction.
Can Cryptocurrencies Fulfil The Functions Of Money
It also makes it possible to speed up the different banking operations by eliminating the existing bureaucracy that, due to its cumbersome procedures, unnecessarily delays the closing of many of the transactions.
What are the advantages of using cryptocurrencies?
Every day the use of cryptocurrencies is more widespread; let’s know the advantages they offer:
Decentralization
Most cryptocurrencies operate in a decentralized manner, depending on their algorithm. That is to say, they are not subject to regulations, or under the control of the government, banking or financial organizations of any kind, and all their users have the same rights and are equal to each other. In fact, in networks like Bitcoin, even developers cannot change the algorithm of their operation. This gives investors a greater sense of security.
Low transaction costs
Transactions in cryptocurrency systems are carried out on the P2P principle without the involvement of a central control body. That is, without any intermediary in their dealings. This makes it possible to reduce network maintenance costs, which significantly lowers transfer costs. Unlike banking and electronic payment systems, users can independently set the commission size and even send transactions without it.
speed and irreversibility
Cryptocurrency transactions are characterized by their high processing speed. And effectiveness, in general terms, is almost immediate. This was one of the reasons for its creation in the first place, to streamline the slow processes of banking transactions. Also, after adding a new transaction to the blockchain, it becomes irreversible. Additionally, the irreversibility of the transactions helps to prevent the falsification of records and fraud in the system, thus contributing to avoiding possible scams.
Cryptocurrencies are not sensitive to inflation
Cryptocurrencies have a sophisticated inflation prevention mechanism. For example, in the Bitcoin network, inflation is avoided thanks to certain features:
- Limited edition of 21 million pieces, not adjustable.
- New coins are issued strictly once every 10 minutes.
- Every four years, the issuance of coins is halved.
- Can Cryptocurrencies Fulfil The Functions Of Money
Similar methods exist on every cryptocurrency network, allowing you to predict how many coins will live in a certain period.
simple and affordable
Many people mistakenly think cryptocurrencies are too complicated to learn and use, but that doesn’t have to be the case. They are available to everyone, and anyone can start using cryptocurrencies, even without technical knowledge or understanding of the system.
