Probably most of you have encountered the concept and subject of cryptocurrencies at least once. Usually, however, information from the media is negative. You often hear about scams or risks associated with cryptocurrency investments. Therefore, they are sometimes stereotypically associated negatively as a fraud tool that causes money loss. Is this perception correct? Is blockchain technology and cryptocurrencies based on it an innovative technology of the future that everyone should know and understand?
What are cryptocurrencies and blockchain technology?
At the beginning, it is worth remembering what exactly this technology is characterized by and how it works. The shortest definition of cryptocurrencies is that they are encrypted, anonymous electronic currencies processed on the basis of a blockchain. Most digital currencies are processed by decentralized computers, processors or graphic cards of users of a given network, dispersed all over the world. They are often called excavators because they are also responsible for mining the currency. The remaining elements are similar to classic electronic banking, i.e. we have our own address, the so-called wallet, from and to which we can transfer our cryptocurrencies. The time of the transfer depends on how efficient the network processing is and the number of confirmations. Usually it takes from a few to several minutes. So the transfer of cryptocurrencies takes place much faster than classic bank transfers, which are made only at specific hours on business days!
Why are cryptocurrencies associated with crime?
Cryptocurrencies started to get loud in 2017, when a large part of projects was gaining in value. Due to the great interest, more and more new projects appeared. The technology itself is based on the so-called open source solution, so in order to create a cryptocurrency you need a good programmer or a few. Over 2000 projects appeared in the blink of an eye. Each project was promoted with its innovative approach and implementation vision in many possible ways. You could find projects dedicated to specific industries or those that wanted to redefine data processing and the Internet itself! There was praise for establishing cooperation with large companies or innovative applications. This resulted in a huge supply and dispersion of investors’ capital. This led to drastic drops in the prices of individual projects in a relatively short time. In addition, it turned out that many of the projects stopped going in the direction defined at the beginning in the so-called whitepaper or development strategy. Some of them turned out to be ordinary frauds and extortions of money from investors. Others died a natural death or were taken over by other development teams. Once it became clear that cryptocurrencies are often used in this way, major online advertising providers such as Google and Facebook banned new projects and exchanges from advertising. Unfortunately, another problem is hacking attacks, which can fall victim to even the best cryptocurrency exchanges. Hackers have very different ways to bypass security, as customers of different platforms have repeatedly found out.
Why is the criminal world using cryptocurrency as a means of payment?
The answer is quite simple! Cryptocurrencies are characterized by full anonymity of concluded transactions. That is why so often in the so-called Darknet transactions are paid with Bitcoin or other cryptocurrencies. In addition, in the case of Scams, i.e. scams that we wrote about earlier, it is easy to derive and liquidate them in such a way that law enforcement agencies are unable to track them. All this made them the ideal means of communicating values in the criminal world.
Are cryptocurrencies a technology of the future that everyone should know and use?
There are many arguments for this solution as a means of storing value. In the era of pandemic reprinting of classical money and creation of virtual currencies without any backing, encrypted electronic currencies are becoming the only alternative to classical money. In contrast, in the last weeks and months, most cryptocurrencies are gaining in value and experiencing a kind of renaissance. Will their value continue to grow? Possibly so. Bitcoin, which has just broken the historical highs, may lead to an increase in the valuation and capitalization of other altcoins as well. At the time of writing this article, you can buy Bitcoin (BTC), the first and most famous cryptocurrency, for a round amount of 30000 dolars. This value seems to be astronomical, however, it is the ratio of supply and demand that regulates the value of given assets, so apparently investors speculate that its price may continue to rise. It is worth remembering that Bitcoin was created after the recent financial crisis and was to give us all an alternative to the classic, indebted and worth less and less money such as the dollar, euro or zloty. The cryptocurrency technology itself is currently one of the most innovative and interesting for the coming years. Therefore, each of you should start to be interested in this subject today because it will probably stay with us for many years!
If you are wondering whether cryptocurrencies have a bright future ahead of them, in our opinion, rather yes. Blockchain technology and the very idea of cryptocurrencies is very interesting, innovative and gives more and more opportunities to use in practice. Many projects are developing in interesting directions and aim at providing convenient and quick payments independent of classic banks. Many of the most interesting and oldest cryptocurrencies are slowly or dynamically gaining value, which also makes them an interesting investment value. These investments, however, are still subject to high risk and therefore we warn you against this as you risk losing all or part of your invested funds. The world of cryptocurrencies is extremely interesting but still liked by the criminal world, which is why it is burdened with such a high risk.
The article was written in cooperation with the bitcoin-exchange.uk portal. If you are looking for other interesting articles about cryptocurrencies and blockchain technology, you will definitely find a lot of them on this website.