Cryptocurrency Is A Misuse Of Blockchain Technology

Cryptocurrency is a misuse of blockchain technology

Cryptocurrency has created a new buzz in the world of tech enthusiasts and cybersecurity experts. However, there is a divided support for the whole cryptocurrency and blockchain hoopla.

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While one sect feels that it holds great potential as the future of currency, its equally high probability of misuse by cyber conman has kept cybersecurity experts on their toes.

Do you still lack clarity on what is cryptocurrency? Here’s the good and bad of cryptocurrency. Also, know if investing in cryptocurrencies is a wise decision.

What is Blockchain?

Speaking of cryptocurrency, you must have encountered the word ‘blockchain’ at some point or the other.

Cryptocurrency is a misuse of blockchain technology

Wondering what is blockchain and what does it have to do with cryptocurrency? Well, they do go hand-in-hand, but there are some basic differences between blockchain and cryptocurrency.

Cryptocurrency is a misuse of blockchain technology

But before we delve into that, here’s what blockchain is?

The blockchain is the decentralized distributed ledger system used to record data transactions across multiple computers. In other words, it is an encrypted chain of information held over a distributed network with an unalterable timestamp.

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It gained popularity because of its ability to store any digital asset or transaction irrespective of the industry.

According to experts, the blockchain market size would grow to $20 billion by 2024!!

What is Cryptocurrency?

A cryptocurrency is a tool or resource on a blockchain network. A combination of cryptography and currency, it a digital coin that uses cryptography for its security and verification.

An asset-backed token or currency, it’s used for multiple purposes and has value through its utility function.

Currently, the cryptocurrencies that are popularly known and are on high demand are Bitcoin, Ripple, Ether, Litecoin, Namecoin, and Monero.

In fact, as of November 2018, the Bitcoin index value was USD 4,241.74.

With increasing awareness about cryptocurrencies, the circulation of Bitcoins has grown exponentially and reached 17 million in September 2018.

Cryptocurrency is a misuse of blockchain technology

Furthermore, there are 4,036 Bitcoin ATMs around the world at present!

What Can You Do with Cryptocurrencies?

India and several other countries have banned the use and trading of cryptocurrencies. Nonetheless, it is a legit form of payment in multiple places across the globe. If you belong to the group that advocates digital currencies, then this shall give you the right amount of boost!

At present, many online and offline merchants accept payment in the form of Bitcoins.

This includes online retailers such as Newegg and Overstock, as well as local shops and restaurants.

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What’s more? Some are already using Bitcoins to pay for flights, hotels, jewelry and even appliances!

Did you know that Apple Inc. has legalized at least 10 type of cryptocurrencies as an acceptable form of payment on its App Store?

Additionally, online platforms such as OpenBazaar and Bitify deal only in cryptocurrencies!

Difference Between Blockchain and Cryptocurrency

In the early days of blockchain when Bitcoin gained popularity, people used the terms blockchain and cryptocurrency interchangeably.

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However, blockchain is the platform of which cryptocurrency is just a part. While blockchain is the name of the technology, cryptocurrency is the token or asset of value.
The difference between blockchain and cryptocurrency is that blockchain forms the network where cryptocurrency transactions can occur. The blockchain network provides the medium for the transaction and enables the exchange of value and information.

Cryptocurrencies are the tokens used within these networks to effect these transactions.

Without a blockchain platform, there would be no means for the transfer and record of these transactions.

The Good and Bad of Cryptocurrency

Cryptocurrency is the current talk of the town. Every second person is mulling over the idea of investing in cryptocurrencies.

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Amidst all the hype, not many are aware of the good and bad of cryptocurrency. So, are cryptocurrencies the most lucrative investment at present? Is investing in cryptocurrencies secure?

Cryptocurrency is a misuse of blockchain technology

What returns would it provide?

Considering an investment in cryptocurrencies? The following sections on the good and bad of cryptocurrency will help you reach a conclusion.

The Virtues of Cryptocurrency

Anonymity

The fact that the blockchain network works on a decentralized system allows its users to be anonymous.

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It operates in the form of silos without the need for users to reveal their details. Although the catch here is that a user uses a pseudonym instead of his/her real name, email ID or address.

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This pseudonym is a randomly-generated bitcoin address that lends cryptocurrency transactions its anonymity.

Secure

The blockchain technology uses a robust combination of hashing and proof-of-work to render the network tamper-evident. Moreover, they are a part of a Peer-to-Peer (P2P) network which allows everyone to join.

Thus to tamper even a single block in a blockchain, one would have to redo the hashes and proof of work and take control over more than half of the P2P network. This is almost impossible to achieve, thus making cryptocurrency transactions secure.

Easy to Join

Cryptocurrencies are a part of the blockchain technology which works on the basis of a Peer-to-Peer (P2P) network.

This form of the network allows everyone to join in as there are no entry barriers. Anyone can deal with cryptocurrencies, or even mine them if they have the requisite hardware.

The Vices of Cryptocurrency

Misuse

Cryptocurrency belongs to a decentralized system with no single governing body overseeing its regulation.

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Thus, it offers complete anonymity to those involved in mining and trading cryptocurrencies. This increases the chances of its use for unscrupulous objectives and illegal transactions.

Volatility

Ever since its inception, the cryptocurrency has had its share of highs and lows. Its value fluctuates on a day-to-day basis, making it very unstable and volatile.

Cryptocurrency is a misuse of blockchain technology

It reached a maximum price index of USD 13,860.14 in December 2017 but has now fallen to USD 4,241.74. This volatility can massively affect its users for the good or the bad.

Irreversible

With cryptocurrencies, one cannot be indecisive since the transactions are irreversible and final. One cannot reverse a payment once it is done on a blockchain network. This is because the whole institution of blockchain works on the tenets of storing data in a way that prevents alteration and tampering.

Thus, post payment, the receiver of the funds can at most refund the bitcoins to the payer.

Experimental

Cryptocurrency is still like the new kid on the block. Being in an experimental phase, it is encountering newer challenges each day.

Yes, there are gradual improvements, but each day brings over more sophisticated threats to its security and integrity too. Investing in cryptocurrencies at this stage can bombard you with fluctuating and increasing fees, slower confirmation and other crucial issues.

Government Regulations

Cryptocurrency is not an official form of currency in any part of the world yet.

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It has stayed in the bad books of the government due to the concerns of misuse in illegal transactions. Also, anything that has value is taxable, including cryptocurrency.

Cryptocurrency is a misuse of blockchain technology

The slightly confusing and complex tax reporting associated with cryptocurrencies is mostly jarring for crypto users and traders.

Should You Be Investing in Cryptocurrencies?

Everything said and done, cryptocurrencies have truly managed to be a hit with some.

But, there aren’t enough reasons yet why people would switch from cash or credit to digital currencies. Though it holds great potential for the future, the cryptocurrency market is still volatile. One should properly think through before making any investment in cryptocurrencies as it is still a high-risk asset.

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