The great popularity reached by cryptocurrencies in recent years 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 about the rapid and overwhelming growth that this new type of cryptoactive was going to experience. Neither the acceptance and the enormous expectation that it was going to generate in the public. For many, the fever generated by the irruption of cryptocurrencies in the financial markets is comparable to the famous gold rush of the last century , but with the tools and digital technology of this century. In fact, these cryptocurrencies are also born from mining.
Knowing what cryptocurrencies are, the risks and advantages of operating in the digital market, is essential if what you want is to invest with the possibility of success in cryptocurrencies. Advantages such as decentralization, low costs, confidentiality of operations and the speed with which transactions are executed are more than enough incentives for many entrepreneurs to be tempted to invest in crypto assets and operate with cryptocurrencies instead of using money. trust.
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What are cryptocurrencies?
Before we can talk about the advantages of using cryptocurrencies in finance, we must start by understanding very well what these new assets are. We can safely say that cryptocurrencies are a new, fully decentralized and intangible means of payment . Cryptocurrencies are presented as an alternative to the use of traditional money or fiat money. That is, it can fulfill the same functions as traditional money but represented by virtual currencies using digital security encryption.
To operate with cryptocurrencies we must forget the idea of physical money. Since, as we have said, they do not materialize on paper or cards of traditional use. Cryptocurrencies are stored and protected in protected virtual wallets. They are created by what until now is known as the most advanced and secure digital technology: the blockchain or chains of blocks. And these wallets can only be accessed through the use of a unique key held exclusively by the owner of the cryptocurrencies.
Why are cryptocurrencies created?
Cryptocurrencies are created to satisfy certain needs that have long been hitting the financial world . Bitcoin is the first and most popular 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 electronic money payment directly from one person to another, without the need for a central authority to validate this transaction.
It also makes it possible to streamline the different banking operations by eliminating the existing bureaucracy that, due to its cumbersome procedures, unnecessarily delayed the closing of many of the transactions. In the same way , it was intended to reduce the costs and times of international transactions . Since by the traditional banking method they generated high costs (in some cases they exceeded the amount of the transfer) and lengthy processes. In addition to a slow movement of money and delays in payments from suppliers and creditors.
What are the advantages of using cryptocurrencies?
Every day the use of cryptocurrencies becomes more widespread, let’s learn about the advantages they offer:
Most cryptocurrencies operate in a decentralized manner, depending on their algorithm. That is, they are not subject to regulations or under the control of government, banking or financial agencies of any kind and all users of them have the same rights and are equal to each other. In fact, in networks like Bitcoin, not even developers can change the algorithm of their operation. Which provides a greater sense of security to investors.
Low transaction costs
Transactions in cryptocurrency systems are carried out according to the P2P principle, without the participation of a central control body. That is, without any intermediary in your transactions. This enables network maintenance costs to be reduced, which significantly reduces transfer costs. Unlike banking and electronic payment systems, users have the ability to independently set the commission size and even send transactions without it.
Speed and irreversibility
Cryptocurrency transactions are characterized by their high processing speed. And an almost immediate effectiveness in general terms. This was one of the reasons for its creation in the first place, to be able to streamline the slow processes of banking transactions. Also, after adding a new transaction to the blockchain, it becomes irreversible. Additionally, the irreversibility of transactions helps prevent falsification of records and fraud in the system , thus helping to avoid possible scams.
Privacy is one of the main advantages of cryptocurrencies . To use the system, you do not need to provide any personal data, which allows you to remain anonymous and hide your costs. In other words, neither financial institutions nor marketing companies, not even the person with whom the transaction is being carried out, can know their identity or the amounts or terms of their operations, unless it is clearly disclosed by the user himself.
You are the only owner of your money
Access to cryptocurrencies in the wallet can only be obtained by providing a private key, which only the owner has . This means that no one can cancel coins from the account or freeze their movements. Cryptocurrencies can become a way to protect your capital. The coins in the cryptocurrency wallet remain subject only to the user and become financial insurance.
Reliable data protection
When paying for goods and services, with methods such as credit or debit cards or by other means, the buyer always risks his personal data, which can be intercepted at the time of payment or stolen from the seller and then used against the seller in order to steal your money. In cryptocurrency transactions, no personal data is transferred to the seller , so you can be sure that the information will remain in your possession and will not fall into the hands of strangers.
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 characteristics:
- Limited edition of 21 million pieces, not modifiable.
- New coins are issued strictly once every 10 minutes.
- Every 4 years, the issuance of coins is cut in half.
There are similar methods in each cryptocurrency network, allowing you to predict in advance how many coins will exist in a certain period of time.
Simple and affordable
Many people mistakenly think that cryptocurrencies are too complicated to learn and use, but that doesn’t have to be the case. In fact, they are available to everyone and anyone can start using cryptocurrencies, even without technical knowledge or understanding of the system. But yes, you should know that they are not without risks .
To get started you need to open a cryptocurrency wallet , get some coins, and have access to the internet. Cryptocurrencies are open and accessible to everyone, including people living in disadvantaged regions where other financial services are not available.