The rise of Cryptocurrencies among youth – Pros and Cons – Essay for SBI PO

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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.

Pros
  1. 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.
  2. The transactions are highly secured and encrypted. They cannot be reversed once completed.
  3. It eliminates the middleman fees.
  4. These are not manipulated by any governmental or central authority and are completely decentralised.
  5. There is a possibility that they may eliminate the banking industry up to some extent in the coming future.
Cons
  1. Since there is no central authority involved, this is still widely used for illegal transactions and antisocial acts.
  2. It is highly dependent on technology so the risk of operational glitches always remain the same.
  3. Fraud risk; as bitcoin is encrypted with a Private Key to verify owners and register transactions, hackers tend to sell false bitcoins.
  4. Market Risk; the value of Bitcoins keep fluctuating on day to day basis.
  5. Tax Risk; a bitcoin is still ineligible to be included in any kind of tax advantages. This hampers the whole purpose of investment.

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