Crypto Currency
A cryptocurrency is a digital currency which relies on encryption for security and to verify transactions, and operates independently of any bank (i.e. has a decentralized control). Cryptocurrencies are records of transactions (blockchains) kept on a decentralized ledger/database which all members have access to, and which is updated whenever a new transaction is verified by a consensus mechanism.
Crypto is created through a process called mining. This process involves creating a new set of transactions that are added to a blockchain, which is what cryptocurrency runs on.
Blockchain is a decentralized ledger of transactions that take place across a peer-to-peer network. When someone initiates a new transaction, say making a purchase with cryptocurrency, that transaction is validated through the peer-to-peer network and a new block is added to the chain.
The actual mining of cryptocurrency is done using computers running software to process transactions and produce new blocks. This process can be time-consuming and it can consume large amounts of energy resources.
When you purchase cryptocurrency you’re trading real currency for digital tokens. These tokens are stored in your cryptocurrency wallet at an exchange. You can then use the tokens in your wallet to make payments to individuals or businesses.
As of 2021, there are more than 10,000 types of cryptocurrency in existence. Cryptocurrencies can be classified as coins or tokens, based on how they work:
- A crypto coin is native to a particular blockchain and defined by the network protocol.
- A crypto token is built on a specific blockchain but defined by a project or contract.
Advantages of Cryptocurrency
Easy transactions
When you are doing business or dealing with brokers or legal representatives, there is a lot of transaction fees that you must pay for every transaction. On top of it, there is a lot of paperwork, brokerage fee, commission and other things to be met. When you use cryptocurrency, it removes the need of the middle man. The transaction would take place one to one on the secure network. The transactions would be transparent, and it becomes easier for you to establish the audit trails. There would be no more confusion on who is going to pay whom. The parties who are involved in the transaction would know each other well.
Asset transfers
The cryptocurrencies can be used to transfer the ownership of assets on one name to another name by paying the seller through bitcoin. It all happens in the blockchain ecosystem. It facilitates you to carry out the transactions safely and securely.
Confidential transactions
The best part of using cryptocurrency is that every transaction you carry out with the recipient would be unique. You can get into terms negotiation in every deal. The information is exchanged based on the push concept. You can only share the information that you want to disclose to the recipient. The financial history will have ample privacy, and your identity would be protected.
Low transaction fee
The transaction fees charged by cryptocurrency transactions would be lesser compared to the traditional financial system.
Strong security
When you perform the transaction in cryptocurrency, you cannot reverse it. There will be a reliable encryption technique used throughout the cryptocurrency transaction process to protect from hackers and tampering the information.
Decentralization
The blockchain technology will manage the database that has the bitcoin transaction records. The decentralization would involve only two parties in the transaction, i.e., the sender and receiver. You no more have to deal with any third party and it enhances the safery and security
Bitcoin payments are mobile
As with many online payment systems, Bitcoin users can pay for their coins anywhere that they have Internet access. This means that purchasers do not have to travel to a bank or a store to buy a product.
Accessibility
Because users are able to send and receive bitcoins with only a smartphone or computer, Bitcoin is theoretically available to populations of users without access to traditional banking systems, credit cards, and other methods of payment.
Arbitration
Arbitration is a strategy where a trader takes advantage of varying prices offered by brokers for particular cryptocurrencies to make a trade. A certain cryptocurrency may have a low rate in a particular market and a higher rate in another location. Therefore, a trader may buy a cryptocurrency at a lower rate and sell it at a higher price in a different country. The different rates can easily be exploited due to price differences. However, there are many factors that affect how much profit a trader may make through crypto arbitration, and such are the reliability of exchange, fee, low demand, transaction duration, fiat currency deposits, money on account, and exchange parameters.
Scalping
Scalping usually makes lesser profits per trade but by executing a large number of small transactions, it will lead to a substantial profit. This strategy is largely based on technical analysis and with a AI algorithm that can consistently execute accurate trades within a short timeframe inorder to make profit from the small price changes.
System Advantages
- Intelligence
- Speed
- Security
- Stability
- Accuracy
Process flow
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