While governments all around the world are trying to control and regulate cryptocurrencies, the crypto networks are growing stronger every day. Cryptocurrencies are gaining popularity like never before. But why is it so? How is it that people are being driven towards cryptocurrencies, even though that they are highly volatile? Despite sanctions from regulatory authorities on trading and mining, cryptocurrencies are not just surviving but rather booming.
In this blog, we will discuss the benefits of cryptocurrency over fiat currency and why people are drawn to it.
Blockchain to Prevent Any Production of Counterfeits
When dealing with large transactions in fiat currency, there is always a chance that you may get defrauded. Checking the fiat currency for its authenticity can be a jarring and tedious task. Not to mention there is always a margin of human error. However, with cryptocurrencies, chances of fraud become near impossible. First of all, there are no humans involved in the verification process. Verification of each transaction constitutes a block of information that will join the blockchain. This piece of data is made public to all the users on the network, which eliminates any chances of tampering with the value of the transaction. Moreover, the verification is done through high processing power computers that are able to solve complex equations in order to verify the transaction. The margin of error is reduced significantly as compared to human error. Furthermore, the idea of encryption and security layer on each transaction makes sure that the cryptocurrency is genuine and not counterfeit. You can invest in bitcoins using the online trading platform like ethereum code
Saving Unnecessary Cuts on Transactions
Cryptocurrencies function on a decentralized network that is spread across the globe through nodes on the network. This means that everybody on the system has the exact same authority over it. Moreover, the transactions are done between two individuals directly. There is no third party involved in the process. Generally, banks and other financial institutions are involved when you are dealing in fiat currency. Their involvement in making the process of transaction smooth costs you a piece of your transaction. As the amount of your transaction grows, the amount that will be charged as a transaction fee also increases. In such a scenario, it is only logical that people would opt for cryptocurrencies when making large transactions.
Liquidity of Cryptocurrencies
Even though there are cryptocurrencies that do not have high liquidity, some of the best cryptocurrency options are highly liquid. To put it simply, it is fairly easy to convert your crypto asset into your regular fiat cash. However, the liquidity is a little more complex than that and has huge impacts on your trading and investment.
Conversion of assets is crucial when it comes to trading. It is possible that you may want to take an out on a trade or that you would want to safely cash your investment when the cryptocurrency is at its high peaks. In both these cases and many similar situations, high liquidity makes sure that you are not stuck with an asset that keeps devaluing. Cryptocurrencies are highly volatile but are generally speculated to rise in value. Whereas fiat currency is much more stable, and even if any changes were to come about, they could not equate the margin of change in the value of cryptocurrency. This makes cryptocurrency a great tool for day trading, as long as you are willing to take risks.
There are pros and cons to cryptocurrency. However, in many ways, cryptocurrency gives you much more benefit as compared to your regular fiat currency. From their value to their network security and revolutionizing implementation of blockchain, cryptocurrencies take away crucial pain points from the people, and hence the increase in its demand.