Why are cryptocurrencies safe?
The credibility and use of cryptocurrencies have increased in recent years. However, some aspects of their security are a recurring concern, mainly in new users. Such doubts may be normal given the novelty of the subject, the myths related to cybercrime, and the special characteristics under cryptocurrencies operate. Nevertheless, confidence in this technology increases as its features and benefits become better understood.
Elements that guarantee the security of cryptocurrencies.
Among the main problems of traditional money are: the susceptibility to counterfeiting, the control of value by a central entity and, the inflation that arises when more money is issued and circulates than is necessary to satisfy demand. Cryptocurrencies, for their part, try to solve various problems and employ various strategies to eradicate these vulnerabilities, guaranteeing their safety above fiat currencies.
Most of these factors lie in their intrinsic characteristics:
- Mathematical algorithms are used to verify the authenticity of each operation, without the possibility of reproducing it. These cryptographic techniques make it impossible to falsify or duplicate them. In addition, the identities of the coin owners are encrypted, thus increasing the security of the users.
- The Blockchain is immutable, thanks to the multiple replicas existing in the network nodes, which guarantees the security of the registries and makes cryptocurrencies one of the safest technologies to use.
- Cryptocurrency transactions do not generally require that both parties trust any intermediary entity, such as Banks, being validated by anonymous miners. A transaction is validated when all the members of the network democratically certify it and are rewarded for their work. The absence of a direct intermediary prevents its confiscation by this entity.
- All transactions confirmed since the start of the creation of a cryptocurrency are stored on the blockchain, providing a complete historical record of the commercial processes carried out, and guaranteeing transparency.
- Finally, cryptocurrencies are mostly open source. It means that developers can contribute to its development without paying a fee, and anyone can use or join the network. This contributes to a more dynamic and organic evolution update of the software.
Cryptocurrencies are also an excellent investment opportunity. A sustainable future is forecast for them: Both, Cryptocurrency transactions, and the design of projects based on them grows exponentially. The diffusion of Bitcoins in the world as a global currency is already a reality. Furthermore, the development of solutions that solve some gaps is already underway. The revolution that the Blockchain has brought to various sectors, beyond payment systems, is constantly increasing.
Cryptocurrencies also avoid the risk of inflation. In the case of some cryptocurrencies, such as Bitcoin, their production is limited by the configuration of the blockchain. No more than 21 million BTC can be produced, avoiding an over-issuance of the asset.
Despite the security mechanisms on which its operation is based, cryptocurrencies are not without risks. Some experts warn about those mainly related to investing in these types of currencies and advise: Investigate exchange platforms, know better how to store your digital currencies, diversify investments, and be prepared for fluctuations.
The fact that most people decide to manage their finances with traditional methods does not detract from the credibility of new methods, such as cryptocurrencies. It is a proven reality that they are completely transparent, authentic, and anonymous and without the intervention of third parties. This is evidenced by seeing how large companies such as Starbucks, Amazon, Twitch have implemented payment systems with cryptocurrencies. In conclusion, cryptocurrency´s main characteristic is precisely the strength of its structure.