In the last article, we discussed the disadvantages of cryptocurrency. The obvious cons were considered as well as contrived by opponents. Now let’s talk about the dignities, which distinguish a new class of digital assets against the background of other currencies and instruments for capital preservation.
Transferring dollars from America to Mexico costs between 2 and 10% (depending on services For example, a person needs to pay an average commission of $52.05 for transferring $500 using a bank, a money transfer operator will take $30.75, mail services will be $34.05 and mobile operators will take $16. Even if you take the average value – 5%, then for every $1000 you have to pay $50 commission. The transaction in the Bitcoin blockchain is currently costs about 10 cents. In other words, for transferring $1000 commission will be less than 0.1%. Accordingly, the higher the transfer amount, the lower the transaction costs in terms of percentage. About a year ago, the Lightcoin blockchain made a transfer of one hundred million dollars, paying a commission of $ 0.40. What do you think, how much would SWIFT system take for sending $ 106 million?
Low commission costs – this is undoubtedly one of the main advantages of cryptocurrency. Especially when it comes to large amounts of money, because the commissions are not calculated in terms of percentage but depending on the network load. The higher the bandwidth of blockchain, the lower the transaction cost. Another question arises when it comes to small transfers, for example, for paying for coffee. But now there are solutions for this. In the Bitcoin blockchain this is the Lightning Network, which is being actively implemented right now.
In the example above, the transfer of 700,000 Lightcoins took just 2.5 minutes. How much would the sender have to wait if he decided to use traditional financial systems? At best, a few days, and many parties would have to sign a deal.
In the blockchain of the first cryptocurrency, if the memory is not loaded, the transactions are confirmed in average 10-30 minutes. Although if you make simple transfers within traditional payment systems, it basically takes seconds. But 10-30 minutes, this is a completely solvable problem, there are already blockchains that do operations instantly.
Everything is relative, if you need to make a transfer of really huge amounts of money, then with the help of traditional tools it will most likely take more than one day, and then the cryptocurrency is faster. But if you need to make a minor translation, then with classical tools it will most likely be done faster. But as already written above, this problem is solved.
Another advantage, albeit a rather controversial one. On the one hand, anonymity provides faster interaction, since there is no need for various services to undergo verification by uploading various photos. You just go into the wallet and transfer the money to the required address without any problems. Many other cryptocurrency fans simply want their transfers or purchases to be completely confidential, even if they do not violate the laws. Not everyone likes that all purchases and transfers under the watchful eye of the state. On the other hand, anonymity can harm. We discussed this issue in more detail in the previous article.
The network of any blockchain is supported by the computing power of the miners who provide them 24/7/365. Any day and at any time, it is possible to enter there and make a transfer. Banks have weekends and holidays that make it difficult to do business.
The indisputable proof is the security of the blockchain. Due to the cryptographic encryption, it cannot be hacked (at least it has not yet succeeded), because with the current development of computers and computing power, the entire solar system will not have enough energy to pick up a private key at random. Probably, the problem will arise when the appearance of quantum computers, but this is a topic for another article.
Of course, there are ways to attack like «51%», but it isn`t so simple, we will make another separate article to this topic someday.
There are also other types of attacks, but, as a rule, they are all tied to the hacking of a central body, for example, the stock exchange or on the inattention of users, for example, phishing attacks. If you keep funds at cold storage, they are well protected.
There are projects that don`t practice limited issue of coins, but it is difficult to call them decentralized. However, the most popular coins are protected from inflation. The maximum bitcoin emission is 21 million, but the production decreasing exponentially due to halving. Ethereum also practices a gradual reduction in the reward for a mined block.
Due to limited emissions, Bitcoin can be an alternative for gold and become a tool for capital accumulation. It`s already called «digital gold», because it has all the properties of this precious metal and at the same time has several advantages.
The Bitcoin`s blockchain and many other cryptocurrencies is absolutely transparent, due to that, it is possible to check transactions down to the genesis of the block. That`s why it can be used, for example, to preserve information, intellectual property, conduct elections, track supply chains and so on. In the blockchain, it is impossible to hide any information as well as criminal activity.
The source code of blockchain projects is available to a wide range of people and anyone can make their own adjustments. If they are relevant and the community accepts them, they will be added. However, the community may be against, and in this case, innovations will not accepted by the network. Only users can control the network. There is no central authority that dictates the rules for personal reasons. This is exactly what Satoshi wanted when he created Bitcoin.
I own my money
If only I have a private key from the wallet, then no one can forbid me to send money somewhere or get it. Banks can freeze an account at any time if they find my transfer suspicious. In the case of the blockchain, this is not possible due to decentralization.
Cryptocurrencies can be considered as a tool to preserve capital due to this advantage, along with the absence of inflation.
In the last article, we have already discussed that this can be both a disadvantage as well as advantage. It all depends on which side to approach. If you are a trader and your job is to earn money, this is an advantage, but if you do business with using cryptocurrencies, then this is possible 2a disadvantage.
Cryptocurrencies are an innovative tool for transferring value and, possibly, saving capital. Although, the second point is controversial now.
I just couldn`t to mention the stable CDC again, which will solve this problem 🙂
However, many experts argue, that when some big capital come in this industry, volatility will gradually decrease.
It`s possible that now is the best time to enter the cryptocurrency ecosystem, because it`s only on the verge of large-scale implementation.