What are the advantages and disadvantages of cryptocurrency? How do I manage cryptocurrency? Cryptocurrency is a digital representation based on the blockchain and using the value of cryptography. Cryptocurrency can serve as a medium of exchange, a unit of account and a means of storing value. Unlike fiat currencies, most cryptocurrencies are completely decentralized and operate point-to-point without any intermediary. Some cryptocurrencies operate on private ledger systems controlled by a single entity. Cryptocurrency is usually only supported by users' trust.

What are the advantages of cryptocurrency?

1. Without intermediaries, consumers may be able to better control their finances and privacy.

2. Some blockchains can provide privacy, security and 24-7 access for any global user.

3. A Swiss army knife. Users can make money, fund, invent, invest, pay and program.

4. Cryptocurrency can provide lower related costs and more cost-effective transactions.

5. Cryptocurrency may be a valuable tool to realize the transformation to a global, trustless and open new digital economy.

6. Some cryptocurrencies enable millions of smart devices to perform transparent and friction-free financial transactions in the Internet of Things (IoT) without human intervention.

7. Some cryptocurrencies, such as Bitcoin, have a high degree of transparency, making it easy for authorities such as the IRS and the FBI to track criminal activities.

8. The so-called "travel rules" under the federal anti-money laundering regulations require financial institutions to transmit information related to the originator and beneficiary when transferring cryptocurrency, which reduces the anonymity of cryptocurrency transactions.

What are the disadvantages of cryptocurrency?

1. Some popular cryptocurrencies have experienced extreme price fluctuations, which may limit their use and have a negative impact on purchasing power.

2. Cryptocurrency has a complex user experience, which often makes it difficult for individuals to buy, sell and hold.

3. Digital assets may be vulnerable to online theft, forgotten passwords and accidental loss. Since there are few intermediaries or sometimes no intermediaries, recovery may be more difficult than the law and is usually impossible.

4. Cryptocurrency has the characteristics of attracting global money launderers and other criminals. The nature of cryptocurrency may increase the risk of fraud or cyber attack.

5. Because they do not have government support at present, asset protection/custody or insurance rely on the encryption platform.

6. The value of cryptocurrency is usually derived from the continuous willingness of market participants to convert legal tender into cryptocurrency. If the market of cryptocurrency decreases or disappears, this may lead to permanent and total loss of the value of the specific cryptocurrency.

7. There is no guarantee that individuals and companies who accept cryptocurrency as a payment method today will continue to do so in the future.

8. Some cryptocurrencies, such as Bitcoin, require mining and a large amount of power input to create units, which may have a negative impact on the environment. Cryptocurrency issued in fixed units may be vulnerable to deflation.

How do I manage cryptocurrency?

Cryptocurrencies, such as Bitcoin and Ethereum, are digital assets that usually have no physical form. They are not currently printed or cast by government entities or central banks - on the contrary, most of them are created (mined) and managed digitally by computer networks.

In this decentralized model, Bitcoin and Ethereum are run by point-to-point computing networks and supported by blockchain (a new type of distributed database). Blockchain enables all peers (sometimes referred to as network participants) to independently approve and verify cryptocoin transactions without the need for trusted intermediaries. Using popular cryptocurrencies such as Bitcoin and Ethereum, network participants can reach thousands.

Most databases that maintain financial records are managed by a single financial institution. With blockchain, the ledger is shared and updated by all computers hosting a particular blockchain. If any computer that keeps records is attacked by hackers, other computers and network participants can continue to work without it.

Several cryptocurrencies operate on the blockchain and are maintained by network participants. Most blockchains use advanced cryptography to provide the privacy and security of cryptocurrencies. For example, an encryption tool called secure hash algorithm will calculate a unique code for each transaction, called hash. Because all transactions on the blockchain are grouped into blocks, encoded as hash values, and connected together through complex mathematics, it is difficult to return and change any records.

Some cryptocurrencies are eager to serve as a form of currency and seek to provide some advantages over traditional currencies in terms of privacy, security and practicality. However, it is important to strike a balance between these benefits and the fact that the value of cryptocurrencies is affected by market sentiment and fluctuations in the exchange rate of fiat currencies. Cryptocurrency provides an alternative to traditional financial models, provides a new way to create and manage currencies, and provides new opportunities for traders and investors.

In general, cryptocurrency is a digital or virtual asset. Many cryptocurrencies are decentralized and eager to become a currency form and exchange medium.