Are digital currencies safe?
United States, Russia and Nigeria, the three countries with the highest volume of online bitcoin trading in 2020. Source: Statista
Since the first #cryptocurrency was launched in early 2009, more than ten years have passed where #technology has advanced and various #digitalcurrency options have been developed that are gaining more attention in the financial world every day.
Virtual currencies are digital currencies that, unlike traditional or physical currencies, are found in the virtual world and whose basic characteristics are:
• They do not have a centralized issuer, that is, there is no body, country or government on which their issuance to the market depends; rather, they are produced through cryptography, which are encoding techniques through specific algorithms on the network. Thus, this type of currency can be used by anyone who is connected to the virtual world.
• There is no physical representation of these coins, but their creation, handling, storage only occurs in the virtual world.
• Transactions through digital currencies are more secure and do not require the identity of those involved in financial transactions carried out in the digital world to be revealed, which generates greater privacy.
The first virtual currency that began to circulate was #Bitcoin in January 2009, and as a result of that date, many more virtual currencies have been created that grow day by day, counting to date with more than two thousand in circulation and the number continues growing.
The technology most used by most virtual currencies is #blockchain, which interacts with other technologies such as Internet of Things (#IoT) or Artificial Intelligence (#AI), for data management and generation of valuable information. Although this technology is the most used, there are virtual currencies that use other technologies which makes a difference in the speed and reliability of transactions.
Although today virtual currencies have a greater participation in financial transactions, there are still doubts about how safe they can be, and their permanence in the financial future in the world; so here we share three points to consider before using them:
1. Clearly define the objective for which you want to use virtual currencies, since although in the future it may be possible to visualize the fact of not having physical currency, the reality is that the use of virtual currencies is still limited, and At the moment it is very focused on #investments, so it is advisable to try as a long-term diversification option.
2. Invest or use virtual currencies with proven value in the virtual stock market, such as: Bitcoin, Ethereum, Litecoin, Bitcoin Cash, Iota.
3. Carry out virtual transactions on secure #platforms that provide support and guarantees.
Some of the disadvantages of using virtual currencies can be:
• Volatility of their prices.
• Lack of current acceptance by some companies.
• As they do not need a regulator such as the Government or the Central Bank and provide privacy, they can be used for illegal transactions.