We think we can say, that today, perhaps, only deaf people did not hear anything about the crypto-currency. However, until now many people do not fully understand what it actually is and what are the reasons to use it.
You also can’t imagine how does this work? Let's take a little bit deeper look.
Below we will talk about what is the crypto-currency in general. Also we think we should stay in more details on its disadvantages and advantages, for your easily understanding of this issue, which in fact is not so complicated.
To think about something, we must first determine the concepts.
So, what is a crypto currency? What does the word itself mean?
In simpler terms, this is a kind of digital currency. By the way, any of us can very well develop such a currency. How does this happen, you ask? In fact, it's pretty simple. Frankly speaking, the "digital coin" does not differ from the well-known computer codes by which the most common money transfers which are usually to us are encrypted. The main idea is that the usual currency should be introduced into the network, and the crypto currency in this same network appears itself. The crypto currency has no emission center (meaning a bank that issues banknotes) in principle.
There are no commissions for the money transfer, and if they still have a place to be, they go straight to the hands of the programmer who wrote the wallet program. Thus, any connections with banks and other intermediaries, with the exception of exchanges that are engaged in the transfer of the crypto currency into the "real", become completely unnecessary. The inflation is not terrible for the currency, and the number of "coins" is strictly limited. But the most important point here is that these same "coins" from the wallet can not be withdrawn without having a code. Here, of course, there are certain inconveniences, namely: the loss of code entails the "combustion" of all funds. In addition, you should never write off the possibility of hacking by hackers. Also no any insurance against such annoying cases.
Types of crypto currency
1. Bitcoin - a peer-to-peer payment system (i.e. using the same pay unit and the same data transfer protocol). It was the very first launched in 2009. And to this day it is the most common currency.
2. Litecoin: a kind of improved Bitcoin and has a number of differences from it. Takes second place in terms of capitalization.
3. Peercoin: is among the top three in popularity. It does not stipulate the maximum amount of coin emission, and inflation takes place (1% annually).
4. Namecoin: the system is built on the principles of Bitcoin and this crypto currency can be extracted simultaneously with Bitcoin. But there is one significant drawback: there is no possibility of legal protection of names from cybersquatters (i.e. from registration of domain names for the purpose of their further resale or unfair use).
5. Feathercoin: this copy of Litecoin provides for several times higher emission of coins and a higher level of protection.
6. Freicoin: Bitcoin is the basis here. There is a tax for so-called. "Simple", which is imposed on all to a single transaction. And, by the way, some of the money is transferred to charity.
7. Ripple: a modified payment system, with corrected errors and shortcomings that were discovered in the functioning of Bitcoin crypto currency.
8. Nem: a peer-to-peer payment system, created on March 31, 2015, which presented new opportunities for blockchain technology, with the ability to create encrypted messages and built-in reputation algorithm
9. Ethereum: is a platform for creating decentralized online services based on technology Blockbusiness, working on the basis of smart contracts. The network was launched on July 30, 2015.
10. Zcash: an open source crypto currency that provides confidentiality and selective transparency of transactions.
11. Dash: an open decentralized payment system using a mechanism called "Darksend" capable of conducting anonymous transactions.
Thus, both advantages and disadvantages of crypto currency become apparent.
Main advantages of crypto currency are:
• Availability of money at any time. It is impossible to freeze the account, there are simply no banking days, as well as the probability of withdrawal of the crypto currency. • You can check the validity of operations at any time.
• The predicted speed of obtaining a crypto currency is rather difficult to calculate.
• In most cases, the commission is provided only on a voluntary basis.
• Limited emissions. Such a restriction attracts a lot of investor's attention.
• Not subject to inflation. Crypto currency is inherently deflationary.
• Absence of commissions for transfers of funds between countries.
And now let's talk about the shortcomings of the crypto currency:
• The complexity of controlling cross-border transfers. Country banks and other supervisory and monitoring bodies do not have the ability to control the release and movements of the crypto currency.
• Lack of possibility to withdraw payment. You should always remember this, and be careful - after all, when confronted with scammers, you can stay completely without money.
• With a few exceptions (such as PPcoin), there is a certain emission limit.
• The absence of a common trade organizer, of course, makes a tangible destabilization in the credibility of the crypto currency.
• Lack of security. This is what turns it into an extremely speculative tool.
• Fluctuations in the course. It can reflect both the main and local factors.
• Insufficient security. The history of all transaction systems is often freely available for security reasons, but the systems themselves, unfortunately, can not always boast a high level regarding the safety of money.
Also there are quite controversial points. As, for example:
• Decentralization. Control over the emission and movement of the Crypto-currency is not allowed either by individuals or by any state bodies - this is a programmed process. • Anonymity. This increases the attractiveness of the crypto currency in terms of taxation, care in the informal sector of the economy. And still, if we look at this issue from a different angle, it becomes obvious that the risks of currency loss increase in the event of bankruptcy of electronic exchanges or as a result of a hacker attack. And, of course, this significantly complicates the regulation of the economy at the state level.
Above we described what is the crypto currency in general and examined in brief details the plusses, minuses, and the most ambiguous aspects of its use.
Thus, we can draw the following conclusions:
Most likely, the reason for the not very high popularity of crypto currency lies precisely in its instability - these are the fundamental qualities of any currency. In order for any equivalent to be viable and effective, there must be two puzzles: its recognition and, of course, liquidity.