Analysis of Cryptocurrency: Technology, Advantages, and Disadvantages

This essay provides a comprehensive overview of cryptocurrency, defining it as a digital asset secured by cryptography and blockchain technology. It discusses the increasing popularity of cryptocurrencies like Bitcoin, despite varying legal statuses across countries. The paper delves into the technology behind cryptocurrency, including cryptography, blockchain, and time stamping, highlighting its decentralized nature and anonymity. It addresses the controversy surrounding cryptocurrency's potential to replace traditional currencies like the US dollar, outlining the advantages of cryptocurrency such as easy access, quick payments, lower fees, privacy, and security. However, it also acknowledges disadvantages like the difficulty in understanding, lack of widespread acceptance, uncertainty, and security risks. The essay concludes by emphasizing the uncertainty surrounding the future of cryptocurrency and its potential impact on the global financial landscape. Desklib provides access to this and other student-contributed assignments.

Running head: CRYPTOCURRENCY
Cryptocurrency
Name of the Student
Name of the University
Author Note

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Abstract
The cryptocurrency is one of the major development that have been done in the last few
years. It can be explained as an online or digital form of money that can be used only
virtually. The fact of it’s because of which it has gain some of the major importance to the
world is due to factor that it is highly anonymous and one of the most secured digital format
of currency in the world. One of the major dilemma that surrounds the cryptocurrency is the
future of these virtual format of money. One of such major dilemma is that it is how much it
will affect the major currencies like the dollar. This paper focuses on the technology that is
used by the cryptocurrency, its advantages and disadvantages and the effects it is having on
real money. Further some of the major examples of cryptocurrency and its effect in the
market are given in the paper.
Keywords: Cryptography, Bit coin, Dollar

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Introduction
A Cryptocurrency can be explained as a digital asset that have been designed in such
a way that it can be used for the purpose of exchange as a digital format of money or
currency. The Cryptocurrency uses the technique of the cryptography for the purpose of
securing the assets, transactions and other details of the customer. In the past years it have
been seen that the use of the Cryptocurrency like the Bit coin have increased a lot and people
are preferring these over bank money as there is more profit to invest in the Cryptocurrency.
Although many of the countries in the world does not prefer digital assets like the
Cryptocurrency to be legal, but in some of the countries like the America the demand of these
have been increasing since the last few years (Narayanan et al., 2016). Due to the ongoing
demand of the cryptocurrency it can be often seen that big business mans are trusting to
invest in cryptocurrency other than the American Dollar. This paper focus on the technology
of the cryptocurrency, benefits, faults and how it is changing the American dollar market.
Technology:
The technology of the cryptocurrency are very much simple to understand, it uses the
concept of the cryptography for the purpose of securing the data of the customer. Other than
this cryptocurrency use the technology of the blockchain and time stamping. The concept of
cryptography uses the technique of encryption for security purpose. All the transactions and
every process that is done in the world of the cryptocurrency is encrypted and hence one of
the most secured way. Other than this, the technology of the blockchain can be explained as a
shred ledger way of transaction (Hayes, 2017). Blockchain is a continuous block or record
that uses the technique of the cryptography. Each of the block in the blockchain contains a
hash pointer and a time stamp that is whenever ever the transaction is done the value of the
hash and the timestamp is recorded. Thus whenever any further transaction is done, tit cannot

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be done without tampering these values. To be more specific let us suppose there are 3 users
of the technology. When client 1 and client 2 does a transaction the record is saved, again
when 2 and 3 does any transaction it cannot be done without informing client 1. That no
transaction can be done without informing the previous owner of the fund. Also some of the
major features of the cryptocurrency are is that there is no need of a central authority to
monitor the transactions (Scott, 2016). The ownership of the cryptocurrency is solely
depended on the value of the cryptography. When a new cryptocurrency is created it is
known as the origin and the owner comes to know all the further transactions of the same.
One of the major advantage and feature of the cryptocurrency is anonymity of the currency.
That’s is it can be called as pseudonymous, as the wallets of the cryptocurrency are tied to
hash addresses and not persons. Hence it becomes tough for anyone to know the actual
owner, as it is not traceable and only the transactions are publicly available.
Legality:
Cryptocurrency is not a legal status in all the countries of the world. Some of the
countries are still barring it from use siting different issues. While the USA permits the use of
the cryptocurrency, it has been facing some of the major issues with dollar. It has been seen
that many of the people are investing more in the cryptocurrency and the value of the dollar is
decreasing. This is because of the factor that there is more profit and more return in saving
money with cryptocurrency (Nguyen, 2016, November). The USA government also stated
that the cryptocurrency like the bit coin can be used for the purpose of buying and selling of
items although there would be churched for tax for the transactions done. Other than this
many of the countries like the Russia describes that owning of cryptocurrency is legal in the
country but the use of the same for the purpose of transactions are not accepted. While some
of the countries like the china totally bans the owning of the cryptocurrency.

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These issue of the legalization has come up due to the decentralised nature of the
cryptocurrency. That is it becomes tough for the legal agencies to trace the transactions done
in cryptocurrency and hence the legalisation issue is rising for the countries. Also if there is
any fraud or theft in the cryptocurrency then there is very less or no scope for turning the
back the money used (DeVries, 2016). The dark market net is also one of the major reason
for the organisation to regulate it.
Cryptocurrency over Dollar
This is one of the greatest controversies that the world are facing in the
modern times. With the rise of the cryptocurrency is the recent future, many of the
investment bankers are looking for the potentials on how the cryptocurrency like the bit coin,
ethirum can replace the traditional flat currencies (Narayanan, et al., 2016). While the
countries like the Cuba have already been started believing in the potential of the
cryptocurrency other than the currency that are normally used (Inan, 2018). With many of
the researches of the fiancé industry of the United States of America stated that the term
replacing of dollar over the cryptocurrency would not happen, but there are chances that most
of the transactions of high values can take place using the cryptocurrency and this will reduce
the use of dollar.
Advantages:
There are many advantages of using the cryptocurrency in the daily life, some of the
main points of the advantages are:
 Easy Access: cryptocurrency are nowadays easily accessible from any country
of the world and hence are easy to buy (Chohan, 2017). Cryptocurrency
wallets are also very much accessible and any one can register for the same
and hence buy some of the cryptocurrency available in the market. Due to the

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desterilized nature of the same it becomes easier to access the wallets without
any trace by agencies.
 Quick and easy payment options: Using the wallets one can easily buy the
cryptocurrency like the bit coin with easy exchange of regular money
(D’Alfonso, Langer & Vandelis, 2016). That is one can just pay the money in
exchange of cryptocurrency like any other transaction though secured
gateways sitting in one place and observing all the components of the
transactions.
 Lower Fees: The wallets that are used for storing the crypt currencies are very
low costly and sometimes free available hence making the transaction cost of
same lower or negligible.
 Private: These wallets are private and only one person use it at a time. Thus
making it one of the most secured way for doing any traction (Hileman &
Rauchs, 2017). Also the wallets just have only address of the user and not the
identity of the user making them anonymous for use. Staying anonymous is
also one of the major advantage of this system.
 Highly secured: With the use of the cryptography and blockchain these wallets
are some of the most secured way of transition that one can have (McIlhenny,
2016). The user not only have the option to priority of the buying transaction
but at the time of the third party selling comes to know where the money is
going.
Disadvantages
While there are some of the major advantages in the use of the cryptocurrency but
also there are some of the major disadvantages of using the same.

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 Difficult to understand: Although the concept is very well known to the people
of the western world many of the people still does not understand the basic
meaning of the same.
 Lack of knowledge: Due to the lack of the proper knowledge of the
cryptocurrency it becomes difficult to understand by many of the people.
 Not widely accepted: Although the concept off the cryptocurrency is not very
much accepted widely (Choo, 2015). One of the other reason for not
accepting is due to the legal issues of the cryptocurrency. As many of the
countries does not accept it, it becomes tough to sell it anywhere.
 Uncertainly: Even though cryptocurrencyis one of the most hot topic in the
recent world but there is no certainty that whether this will sustain in the
recent future of the same.
 Hackers: The wallets are although most secured way for the transation of the
cryptocurrency there always remains chances on the security issues of the
same.
Conclusion:
Thus, concluding the topic it can be said that the cryptocurrency is one of the most
promising technology that the world is having today. Its potential of dissolving flat cash like
the Dollar is still a question to the world, but can never be said. IT may happen that at certain
time it exceeds the dollar, or vice versa may also happen and the value of the cryptocurrency
gets down to zero. It is a question of uncertainty on whether there the cryptocurrency will rise
or dissolve in the recent future.

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References
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Legality across National Jurisdictions.
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DeVries, P. D. (2016). An Analysis of Cryptocurrency, Bitcoin, and the
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Hayes, A. S. (2017). Cryptocurrency value formation: An empirical study leading to a
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Inan, S. (2018). Are Cryptocurrency Price Changes Predictable (Doctoral
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University Press.

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Narayanan, A., Bonneau, J., Felten, E., Miller, A., & Goldfeder, S. (2016). Bitcoin
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University Press.
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