Historically, the main use of cryptocurrency has been as a payment mechanism in the online world. Bitcoin was created with these goals in mind: it was fast, free of censorship, and independent of central banks. While many cryptocurrencies today serve these purposes, some have developed other applications and use cases. One of the most prominent uses of cryptocurrency today is speculation. In this article, we’ll explore some of the issues surrounding the cryptocurrency market. We’ll also look at the use cases for cryptocurrencies.
Transparency is the ethos of cryptocurrency
Bitcoin’s creator Satoshi Nakomoto started the cryptocurrency space as an anti-corruption crusade. The Bitcoin genesis block even contained a footnote regarding the 2008-2009 bank bailouts. The founder wanted to establish a new model of exchange where people could freely share data and operate freely. He has maintained this transparency ethos ever since. The open-source world of Bitcoin also encourages transparency in other areas of society, including banking.
Transactions are recorded on a global ledger
The blockchain is an open, public ledger of crypto transactions. This global record-keeping system enables participants to verify each other’s identity and cryptocurrency balance. A crypto-based transaction can take as little as one second, but this feature has drawbacks. For example, a blockchain may contain information about a third-party’s private key, which could compromise the transaction’s security. Furthermore, a blockchain might include the personal information of people who make transactions, which could compromise their anonymity.
There’s no single source of truth
Blockchains are digital ledgers that cannot be manipulated. Thus, they can indisputably prove facts about past events. As a result, there is less risk involved and thus, fewer insurance premiums. Blockchain technology is being developed by companies like Credivera. In addition to this, they spent a year working with the CANA to develop a blockchain for cryptocurrency transactions. This is the first step towards creating a more transparent and reliable blockchain.
There’s no insurance on funds held in cryptocurrency
While the FDIC protects money held in U.S. bank accounts, the same cannot be said of cryptocurrencies. Because cryptocurrencies are not considered “financial products,” there is no federal agency or state regulation to protect the funds. The FDIC’s limit is $250,000 per account holder. Moreover, since there is no guarantee of losses exceeding that limit, cryptocurrency investors are at risk of losing everything.
It’s a commodity
Cryptocurrency is a complicated topic, and a legal test to determine whether it is a commodity is not clear. The SEC has said that two of the largest cryptos are commodities, and the CFTC is currently investigating whether it has jurisdiction over Coinbase. While the legality of the crypto market is still very much up in the air, one thing is for sure: cryptocurrencies are here to stay. The question is whether they will be regulated by the same agencies that govern stock and commodities.
It’s a form of payment
The cryptocurrency market is notoriously volatile, and prices of items today may not be the same as they will be tomorrow. Hence, businesses interested in experimenting with crypto payments can consider accepting cryptocurrency as their primary form of payment. It also reduces transaction fees by eliminating the need for third-party processors, which in turn decreases the cost of goods. However, accepting cryptocurrency may also introduce security issues, so small business owners should be aware of these risks before accepting crypto payments.
It’s an investment
For new investors, the biggest challenge is determining whether Crypto is a good investment. First of all, you need an asset that holds value. That asset could be a currency or commodity. For example, gold, silver, or platinum are all examples of valuable store of value assets. As a store of value asset, Bitcoin continues to outperform the US dollar and gains more acceptance among everyday people. For those who have been investing in crypto for years, the ups and downs haven’t deterred them from putting money into this asset.