Cryptocurrency is a digital asset that is primarily used as a transaction medium to secure financial transactions, control the creation of additional assets, and verify any transfer of assets with the help of strong cryptographic technology. It is also known as a form of digital currency or virtual currency. Unlike central banking systems, it is a decentralized financial transaction and control system that works through a blockchain used primarily for financial transactions.

The first decentralized virtual currency that was developed in 2009 is Bitcoin, which is known as a virtual currency unit and works independently without the assistance of any central bank or administrator. Since then, around 4,000 altcoins of various bitcoin variants have been developed. Bitcoin is considered a peer-to-peer electronic cash system in which users transact directly without intermediaries.

Blockchain is a data file consisting of numerous blocks that keeps records of all previous bitcoin transactions and also the creation of new ones. The normal average time between each block is about 10 minutes. The most frequent use of bitcoin is supported by third-party software called a Bitcoin wallet. By using this software, one can easily store, receive and manage the transaction of bitcoin units. To transact bitcoin, you need to have an account at any of the bitcoin exchanges around the world and transfer fiat currency to that account. Therefore, the account holder can make future transactions using these funds. Apart from bitcoin, some of the other sources of cryptocurrencies are the petro, which is mainly used for oil and mineral reserves.

There are some pros and cons associated with using digital currency. The main benefits of using a virtual currency are as follows:-

• Provides a quick transparency layer:-

Bitcoin generally operates with the help of a ledger called a Blockchain that records and monitors each and every transaction. Once a transaction is made and posted to this ledger, it is considered static. These transactions can be verified at any time in the future and thus, in addition to this, it also ensures security and privacy regarding all transactions made through a particular account.

• Fast processing and portable use:-

Billions of dollars of bitcoin can be easily transferred from one place to another without detection with the help of a single memory unit. When making any type of transaction, the participation of third parties can be eliminated through the use of this bitcoin technology. This will result in a quick and easy transaction without third party approval,

• Low transaction costs involved:-

The transaction costs involved in exchanging these digital currencies are much lower, which makes them more affordable than real currency for people around the world. Therefore, the cost of any type of transaction carried out is much lower, which turns out to be an advantageous feature for the population when carrying out any transaction.

• Combat and eradicate poverty:-

Banking systems and financial institutions often fail to provide help or assistance, especially to the backward classes in rural areas. Bitcoin serves as an alternative in cases where it extends its robust financial services to anyone with Internet access. It often serves as a support for the poor and oppressed classes who in most cases are not offered any viable alternative.

As a newer or newer technology arrives, there are also some negative factors associated with its use, which are as follows:

• Lack of knowledge and distrustful approach of the population:-

Due to the lack of knowledge about digital currency, people are more likely to be wary of its widespread use. Therefore, there are very few trading systems that accept these cryptocurrency sources, which limits the trading systems that prefer to use the virtual currency in their daily transactions.

• Untraceable transactions:-

Since the transactions made by bitcoin cannot be traced, it provides a space for criminal transactions. In such cases, drug traffickers and scrupulous people are the ones who make use of said virtual currency so that their illegal activities are not easily detected.

• Volatile nature and uncertainty:-

Cryptocurrency is sometimes volatile and keeps changing frequently on a large scale. Sometimes people make a huge amount of money when the market rates of these virtual currencies skyrocket, and sometimes they also face huge losses when the price crashes.

Cryptocurrency is an innovative but amateurish concept that can potentially disrupt the entire financial market. It is true that this digital currency has captured the world’s attention in a short time. There are always pros and cons to every new technology that comes onto the market. To make the best use of it, one needs to look both ways before making any decisions.