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Exploring What is Cryptocurrency Together with Its Advantages and Disadvantages

"Yuliana Dewi" (2023-02-20)

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Maybe the meaning of cryptocurrency is not that close to some people. But, it's true that you have at least initially heard of Bitcoin. Read information regarding cryptoccurency, functions, and its drawbacks and strengths in the article below.
Cryptocurrency is a nickname for digital currency that can be used for business between users without the need to go through a 3rd faction. If in business generally banks act as a 3rd faction, in cryptocurrency, no one acts as a connector.

The cryptocurrency business starts from a computer network that uses a separate calculation algorithm. This mathematical calculation is called cryptography which uses blockchain technology. Bitcoin is the first and biggest type of cryptocurrency.

Cryptocurrency concept
In order to learn more about cryptocurrency, read the discussion on each of the following characteristics:

Digital: Cryptocurrency is digital or virtual money, therefore it doesn't have a tangible form like coins or paper money.

Peer-to-peer: Cryptocurrency is continued from the sender to those who receive through online means.

Global: Cryptocurrency has a global nature and is valid in all countries as long as the country admits cryptocurrency.

Encrypted: Unlike bank accounts that use real names, real identities are not used in cryptocurrency accounts. Users are humiliated by but all people can see all the business that is happening on the blockchain. Not only that, there are no limits or regulations for what business cryptocurrency is used for.

Decentralized: The bank does not act as a center for storing money. Cryptocurrency is not managed by a central server, that's why it's called decentralized.

Even so, all businesses are always listed on the blockchain. Logging is run by cryptocurrency miners. Miners are the people who run the servers and act in validating the business. The technique is to solve complicated cryptography puzzles to verify the business. If successful, miners can get commissions in the form of digital money that can be used.

Mining digital money requires software suites and split computer algorithms. The features used must be a computer with private and modern details, and large data storage.

Blockchain is like a ledger that contains data for every business. Anyone   can connect to this base even if they don't do a virtual business.

Truthless: Users can both send money via the online method, no need to trust money or data to a 3rd party (in this problem, this is the bank faction).

Get Rich Suddenly from Cryptocurrency?
You can use cryptocurrency to make purchases. Even so, in Indonesia crypto money is not yet an accepted payment for some generally. But lately, PayPal has announced the launch of a new service that allows loyal consumers to buy, limit, and sell crypto money from their PayPal account.

Not only that, some people use cryptocurrency as an investment. Maybe you've heard of some people getting rich suddenly from Bitcoin.

Since it was first launched, the price of bitcoin has indeed increased very quickly. Even so, the volatility is also high, i.e. suddenly having a marked and rapid increase or decrease in value.

Taking from Investopedia (21/3/2021), the price of 1 Bitcoin (1BTC) was $1/Rp. 14,000 in April 2011. This price rose 3200% in three months to $32/Rp.448,000 in a similar year. However, the price fell to only $ 2/Rp 28,000 in November 2011.

In December 2014, the price of 1 BTC reached $1156/Rp.16,184,000, but in early January 2015, the price dropped sharply to $315/Rp.4,410.00 in just a matter of days!

This problem makes cryptocurrency a high risk investment. Can be very profitable, but the potential for losses is also very large. Also, the same as taken from Forbes (26/2/2021), Bill Gates himself reminds everyone to be vigilant when investing in cryptocurrency. Except, if your money is around Elon Musk. Also, Bill Gates said that even if he doesn't "go with the bandwagon" he will invest in Bitcoin.

Not only that, the Authority for Financial Services (OJK) reminded that nowadays there are more and more fraudulent cryptocurrency investments selling high interest investments.

Therefore, before deciding to make any investment, whatever the instrument, regulations are needed. Get to know the impact profile first and match it to your goals and financial situation.

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