Advantages of Cryptocurrency: All You Need to Know
The market is expanding as people get schooled on blockchain technology while discovering interesting new ways to utilize it. There is also a constant stream of new and innovative projects where this technology is providing a helpful solution.
Finally, stereotypes about cryptocurrencies being used for shady practices are being shattered. In the following article, we’ll cover the advantages offered by cryptocurrencies compared to their fiat counterparts and the traditional financial infrastructure.
Simple Transactions
Traditional transactions, especially large international ones, include many intermediaries, expenses, paperwork, and fees, and depending on your or the recipient’s bank, there are often other conditions listed in small print.
Cryptocurrencies don’t require a middle man. Each transaction is verified on a secure P2P network for a small fee, no matter the physical distance or borders between the sender and the recipient.
Transaction Fees
If you look closely at your bank statement, you’ll be surprised by the fees paid for each transaction. This is even more noteworthy for foreign money transfers through Western Union, for example.
On the other hand, Bitcoin transaction fees are minuscule. This transaction transferred 112,027 BTC for a fee of 0.00046743 BTC. This was a transfer of more than $930 million for a fee of around $3.
Confidential Transaction
Each transaction you make with your debit or credit card is recorded with the bank and serves as a reference for the credit agency or the bank. Transactions involving larger sums of money may also involve further background checks.
With cryptocurrencies, your privacy is protected, as your personal information isn’t associated with the address that holds the funds. Any information that you disclose is per your discretion.
Access to Loans
Projects like Ethereum allow for the development of decentralized finance or DeFi. One popular form of DeFi includes financial applications that enable borrowers to connect with lenders. Currently, there are billions of people without appropriate access to banking systems and with access to smartphones. Cryptocurrencies and DeFi can facilitate access to such services.
Simplifying International Trade
While still unrecognized as a legal tender anywhere except in El Salvador, cryptocurrencies are not subject to exchange rates, interest, transaction charges, or other state-imposed limitations. In other words, this is a cheap way to send money across borders.
Individual Ownership
In traditional banking, a third party supervises your funds. That means that a bank or another financial institution has significant authority over your assets.
With cryptocurrencies, you’re the only one with access to your assets if you keep them in an appropriate software or hardware wallet.
Simplifying International Trade
While still unrecognized as a legal tender anywhere except in El Salvador, cryptocurrencies are not subject to exchange rates, interest, transaction charges, or other state-imposed limitations. In other words, this is a cheap way to send money across borders.
Flexibility
At the time of writing this article, there were more than 6,500 cryptocurrencies listed on CoinMarketCap. Not all of them are equally useful, but a significant number have compelling use cases for cryptocurrencies, and it underscores the adaptability of the technology.
Some of the most common types include payment cryptocurrencies, stablecoins, infrastructure cryptocurrencies, and privacy coins.
Security
Once you execute a cryptocurrency transaction, it can’t be reversed. Traditional fiat currencies can be charged back, and this acts as a safeguard against fraud, but it also represents a mechanism through which fraud can be executed.
Bad actors cannot manipulate blockchain itself in such a way as to reverse the transaction or divert funds to the wrong recipient.
