Cryptocurrency is a peer- to- peer, decentralized payment system that allows people to exchange currency with each other over the web without the involvement and interference of any third party such as a bank or financial institution. It is a digital currency that uses a complex coding system known as cryptography to secure its transactions.
Cryptocurrency is not tied to any country. It is a universally accepted currency that is not bogged down by government regulations, exchange rates and interest rates of any bank or governing authorities.
Bitcoin is the world’s first cryptocurrency. It was introduced in 2009 by an unidentified person known as Satoshi Nakamoto. It’s not made up of gold, or platinum, or any other precious metal. It’s just like any other currency like the US dollars, Euro, Rupees or Yen. However, unlike these currencies, it’s completely decentralized. This means money can be transferred from one person to another and there is a network of users who control and verify the transactions instead of any central authority like a bank or government.
With every passing year, more and more people have started to invest in cryptocurrency which has made the market such a huge place for money-making and getting profits. Many businessmen are being lured to start their own cryptocurrency business. But before investing, there are certain facts that every business owner should know.
Here are five of them:
- Cryptocurrency eliminates the middlemen
Bitcoin was introduced with an aim to take the middlemen out of the picture. All the transactions are anonymous and aren’t subject to government regulations. They have no additional fees associated with them as the transaction only has to go through the mining process which takes much shorter (only a few minutes) for verification in the public ledger. It is an incredible benefit as you can carry out transactions all over the globe for less money than it’ll cost you to use traditional financial intermediaries and finance is widely available once more. This makes cryptocurrency less expensive than the traditional payment methods such as credit cards.
- Fraud protection
This is advantageous for business owners or merchants who accept digital transactions such as e-commerce websites. Unlike credit or debit cards where senders or banks can counterfeit a transaction causing credit charges charge-backs, Cryptocurrency transactions are non- reversible and there is a security system in place to stop the fraudulent activities.
- Risky Investment
Bitcoin investment is very risky because of the following reasons –
- No regulation
- Improper scrutiny
- Extremely volatile
You can lose all the money you have invested in cryptocurrency due to the above three factors. Nowadays, many startups are offering cryptocurrency in exchange for capital to the investors. Before making this kind of trade, investors in ICOs are advised to know how they’ll get their money back if they can’t cash out the tokens and will they be able to resell these coins in the secondary market. Thus, they need to understand all the risks associated with the investing.
- Difficulty in accessing data
It is very important for an entrepreneur to gather data about their customers. This information is very important as it allows them to know what their customers want and what improvements are required to be made in their products. But, cryptocurrencies make it difficult for companies to access that data.
- Business Reputation at risk
Cryptocurrency is anonymous and unregulated, but it can spoil your business reputation if someone hacks your customer’s digital wallets and steals their digital tokens. Since cryptocurrency is based on blockchain technology and is safe but nothing can be 100% foolproof.
Thus, many people look at cryptocurrencies as the future of money. In the coming years, they will keep growing in value and will get harder and harder to earn.