The term “cryptocurrency” refers to a virtual currency or asset secured or protected by cryptography. Unlike banks that operate with physical cash, cryptocurrencies give users virtual tokens that can be used for secure payments online. Several types of cryptocurrencies are in circulation today. The most famous of these is Bitcoin that owns 60 percent of the world’s cryptocurrency.
Cryptocurrency allows you to make secure payments online. As the world moves into a digital age, we see now more than ever the need for secure online transactions. However, just how safe are cryptocurrencies? How do we know that our virtual money is not going to be taken by hackers? There are advantages and disadvantages to the use of cryptocurrency, but does it have the potential to replace all other currencies? What are the dangers of trading cryptocurrencies, and how is your cryptocurrency kept safe?
What is Cryptography?
Cryptography is a process that involves the use of an algorithm to encrypt or hide information from malicious third parties. The word “crypto” comes from the Greek word “kryptós” which refers to something hidden. In cryptocurrency, the word “crypto” refers to encryption or hiding of information. Banks make use of encryption to keep your data safe when you bank online. Even if a hacker can obtain the encrypted text, they cannot read it because the encrypted text is random, and does not follow any predetermined pattern.
Blockchain technology is simply the decentralization of data storage to prevent the control, manipulation, or ownership of data by a single entity. It is a digital or computerized ledger system that records transactions. Every block in the chain contains transactions, and every time new transactions occur on the blockchain, the transaction is documented in all participants’ ledgers.
Therefore, if a transaction is altered, it should become evident immediately. To change a single transaction, every block in all distributed versions of the ledger must be amended. Hence, as the blockchains grow, the security of the cryptocurrency increases.
Now that we have a little more information on what cryptocurrency is, and how it is kept safe from hackers; we can now discuss the advantages and disadvantages of cryptocurrencies.
The Advantages of Cryptocurrency
- Cryptocurrencies make the transfer of funds from one person to another easier, without the need for a third party like a bank.
- When transferring and storing money with a bank, there are several costs and charges involved. However, with cryptocurrency, minimal transfer costs are encountered.
- The ownership of assets can be transferred from one person to another by paying the seller using cryptocurrency.
- With cryptocurrency, your transactions are confidential.
- Trading with cryptocurrency is easy as internet access is widespread throughout the world.
The Disadvantages of Cryptocurrency
- Cryptocurrency can give rise to illegal activity such as money laundering and tax evasion.
- Cybersecurity is a big concern for those interested in using cryptocurrency.
- Transaction speed may not be as fast as Visa and Mastercard.
- Lack of regulations is another concern as cryptocurrencies do not belong to any government or political entity.
Crypto Trading Platforms
A crypto trading platform is a platform that allows for the exchange of one type of cryptocurrency for another. These platforms are not all the same, and they differ based on quality.
There are two types of crypto trading platforms. The first is direct trading platforms. These trading platforms enable exchanges on a peer-to-peer basis. Your purchase and selling prices are tallied with the orders of other users. If the two amounts match, the trade takes place.
The second category is crypto brokers. This type of crypto trading platform makes use of a third party that arranges transactions between the buyer and seller. A disadvantage of choosing this category of crypto trading platform is that it is quite expensive when compared to direct trading platforms.
There are several things to look for when choosing a crypto trading platform. The most important thing is security. Take into consideration the types of virtual currency you wish to trade and ensure that the trading platform you choose supports that currency.
INX Crypto Trading Platform
INX is a new and developing crypto trading platform for trading blockchain cryptocurrency. In 2020, INX became the first company to be cleared by the United States security and Exchange Commission. They offer both direct and crypto broker trading methods and a high level of security. Here are some advantages to using INX as a trading platform for cryptocurrencies.
- INX supports the trading of many types of virtual currencies.
- They allow you to buy and sell cryptocurrencies via their trading platform.
- Trading virtual currency is made easy with both online and mobile trading.
- You are given instant asset trading settlement.
- INX uses cryptography to keep your transactions private and your virtual currency safe.
- Their user interface has been designed for both institutional and retail investors.
- They offer a trading analysis tool to view your options before embarking on a trade.
- You have access to management tools to keep track of your balances, create custom reports and manage your wallets.
It is important to know your crypto trading platform before engaging in crypto investments and trading. INX is a world-leading cryptocurrency trading platform that is perfect to use if you are just getting started trading, or whether you are an experienced, seasoned trader.
As the world moves into a digital age and everything from shopping to banking becomes digitized, there is a definite future for digital currency in our modern world. As we move away from trading with physical cash, there is a need for a currency that does not need to be withdrawn or managed by third parties such as banks.
Cryptocurrency has the potential to replace hard cash and we should see a steady increase in the number of people investing in it. Take into consideration the type of crypto trading platform when choosing to trade with cryptocurrencies to prevent your experience with cryptocurrencies from being a bad one.