People main concern in cryptocurrency is its reliability of data processing. Cryptocurrency has the potential to replace traditional payment methods as it provides distinctive ways to maintain data consistency due to its underlying transaction system, the Blockchain technology. First of all, this technology provides high level of communication security between nodes no other currency can promise. Privacy is guaranteed and secured transfers assured. Blockchain technology ensures to provide users identities difficult to counterfeit without the need of any personal information. Coin owners will be able to access their accounts with an encrypted pseudonym protecting them from any identity exposure, and manage their cryptocurrency wallet freely. But cryptography not only ensures anonymity for users, as data transactions also benefits from this protocol. Funds transfer and data circulation between parties on the network are also encrypted using a public key, and only the matching private key can be used to decrypt.So, isn’t it more wiser to place trust in algorithms to protect our confidentiality?
Secondly, even though an encryption protocol is implemented to decrease data vulnerability, validation procedures are always applied. Cryptocurrency relies on developers to maintain data consistency. In Bitcoin for example, one of the most popular virtual currency, an infinite number of developers known as miners apply working knowledge to conduct algorithms, generating bitcoin as a result. After processing, completed bitcoin transactions become immutable members of the giant virtual chain, impossible to alternate. Thus, blockchain ensures the preservation of data integrity, as it is a crucial feature to gain consumers and enterprises trust, as discussed …“Understanding Modern Banking Ledgers through Blockchain Technologies: Future of Transaction Processing and Smart Contracts on the Internet of Money” in its paper. Financial institutions need to have confidence in the validity of their data.
Additionally, another major reason behind the cryptocurrency success is the system transparency. Unlike conventional bank system of payments, clients not only have access to their own account information. Data flow is globally visible for all participants while anonymity is still conserved. Blockchain’s implemented protocols have been able to provide traceability and transparency of the data stored, as proved by the survey conducted by “Blockchain challenges and opportunities: a survey”. Each step of a transaction is recorded and can be supervised by the user in control of its data.
Even though reliability and safety are important, however they are not the only assets behind this new currency. This new digital world, became attractive for investments as being detached from government regulations. More and more people losing trust in traditional systems of exchange and payment are investing in cryptocurrency. Unlike conventional currency, this digital money that relies on a distributed and decentralized database for storing transaction information provides an alternative to our capitalized financial organism. Two parties are now allowed to transact directly using a peer-to-peer network Decentralized Blockchain Technology and The Rise of LEX Cryptographia without the need of a middleman, as “smart contracts” algorithms are used to insure consensus and agreement. As Blockchain Disruption and Smart Contract points out in his article, smart contracts enforce transactions’ performance. They guarantee that each party respects its share of the contract by including refund mechanisms to protect from any kind of violations. This decentralization would enhance globalization as money will become universal and exceed the virtual geographic borders drawn by the international money exchange system. Money transfer across nations will become easiest and faster, leading to a more unified world.
Finally, many people are attracted to cryptocurrency as it helps them saving time Which Cryptocurrencies Have the Fastest Transaction Speeds?” and money. Due to its system of decentralization, cryptocurrency eliminates the role of the middleman. Thus, payments are validated using a non-stop working system that not only contributes in saving time but also helps in reducing transactions cost as the fees paid for miners are way lower than those paid for the central authorities . Decentralized Blockchain Technology and The Rise of Lex Cryptographia. Making online purchases with bitcoin would be like using a far more anonymous version of a credit card with lower transaction fees and exchange rates. And as this technology grows, its features improve. A new implemented technology called “lightning network” was developed to further reduce transaction fees and time as conducted studies have shown. Lightning Network: A Comparative Review of Transaction Fees and Data Analysis. People can conduct all their payments in a more easy and comfortable way with reduced money and cost.
Besides its numerous advantages, cryptocurrency has continued to divide opinions. Some still question the reliability of this new currency fearing its “unstable” state. Some economists don’t see any prominent future for this emerging currency. Cecilia Skingsley, the deputy governor of the Swedish Central Bank, claimed that cryptocurrency fluctuates a lot and is not well suited to be adopted as a permanent mean of exchangeWith the coronavirus epidemic, cryptocurrencies have experienced an exponential increase in price since Wuhan was placed under isolation. Bitcoin with a near 10% gain in value in less than a week, is now trading at its highest value since November.
However, while the volatility aspect has attracted criticism, other economists and specialists find this situation normal in the world of finance. As on one hand, we are already living with a volatile system which had also been influenced by this global crisis. On the other hand, seen from another perspective, those fluctuations have made some developments in the cryptocurrency industry. Some investors and business leaders like Vitalik Buterin (the creator of Ethereum) How does the future of Cryptocurrencies Look in 2020 | Expert Opinions & Forecast” see this volatility as a great opportunity for investments not to be missed and share his belief in digital money. As at first people have struggled against the use of the Internet, today they refuse to change for a new method of payment to which they are not used yet.
On a more global scale, some countries who previously banned this technology are now looking forward not just to implement it but to create their own digital currency.
To sum up, cryptocurrency is a main competitor for conventional money and can achieve a widespread adoption as it offers a more secure environment based on strong cryptography, better reliability, and a decentralized digital ledger that saves time and money. Achieving this milestone will require lot of time and work as the challenges are large, but the results promising. But will the authorities