Hello and welcome to exampundit. Today we are sharing an essay on “The rise of Cryptocurrencies among youth – Pros and Cons” for SBI PO Mains 2018.
The rise of Cryptocurrencies among youth – Pros and Cons
Cryptocurrencies are the currencies encrypted or encoded through cryptography. In other words, it is a digital currency in which encryption techniques are used to regulate the generation of units of currencies. A cryptocurrency is created by miners. Only a minor has the authority to validate a transaction. A transaction until verified can be forged. After being confirmed by a minor it becomes a part of the blockchain and cannot be reversed or forged.
The first ever cryptocurrency – BITCOIN – was founded/invented by the group or individual named as Satoshi Nakamoto in 2008 and introduced to the world in 2009. Bitcoin is a peer-to-peer electronic cash system which requires no bank or regulatory authority. In this never-stopping world, this has been an easy and favourite way of monetary transactions, especially among youths. Here are some pros and cons associated with cryptocurrencies.
- The transaction parties can remain anonymous if they wish to. These transactions are pseudonymous in nature i.e. neither the transactions nor the accounts are connected to the real world identities. A 30-digit address is received that consists of alphabets and numbers coded in a certain way.
- The transactions are highly secured and encrypted. They cannot be reversed once completed.
- It eliminates the middleman fees.
- These are not manipulated by any governmental or central authority and are completely decentralised.
- There is a possibility that they may eliminate the banking industry up to some extent in the coming future.
- Since there is no central authority involved, this is still widely used for illegal transactions and antisocial acts.
- It is highly dependent on technology so the risk of operational glitches always remain the same.
- Fraud risk; as bitcoin is encrypted with a Private Key to verify owners and register transactions, hackers tend to sell false bitcoins.
- Market Risk; the value of Bitcoins keep fluctuating on day to day basis.
- Tax Risk; a bitcoin is still ineligible to be included in any kind of tax advantages. This hampers the whole purpose of investment.