Cryptocurrencies, according to the dictionary, are “a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.”
If all of that sounded like a foreign language to you, you aren’t alone. Put more simply, cryptocurrencies are digital funds that allow you to make purchases and trade funds in a decentralized state. This means without the confines that come with using a bank.
Think of it as peer-to-peer sharing for money!
Though you may be hard pressed to find physical financial entities willing to take crypto seriously, you might be surprised to discover how insanely popular this digital financial market has become. In fact, in 2018 it was found that over 18 percent U.S. students have owned cryptocurrency at one point, and those numbers seem to be growing!
What are The Benefits of Crypto
- Prevent Identity Theft: Using traditional spending methods like a credit card puts you at risk of having your identity stolen. ATM skimmers are a common way for people to get your card information and drain your bank account before you ever even realize what is happening. With cryptocurrencies, your purchases involve sending specific digital amounts of money with no attached or required additional information. There is nothing there for criminals to latch onto in an attempt to steal your identity.
- Avoid Buyer Fraud: Many people who sell items or services online have dealt with the frustration of unwarranted charge-backs from purchaser looking to get something for free. Fortunately, this is not possible when dealing with cryptos.
- Lower Transaction Fees: Unless you are using a third-party service to maintain your bitcoin wallet, there are no transaction fees for crypto purchases.
- Fund Safety: When you keep your money with a real bank you risk losing it in the event of an economic crash. Since cryptos don’t use banks, this can be avoided.
How Does Paying in Crypto Work?
Cryptocurrencies operate on a technology called blockchain. Blockchain is a decentralized public ledger that uses what is effectively peer-to-peer sharing to maintain financial transactions. There are sometimes up to 5 million networks involved in the processing of these transactions depending on the type of crypto you purchase.
Once you have purchased a cryptocurrency, you will need to maintain it in a digital wallet. Since cryptos are not a tangible form of money, these digital wallets help maintain your crypto amounts before and after transactions.
Once you have your wallet set up and are prepared with coins to spend, you are set to go. Not every online store or service allows the use of cryptocurrencies, but those that do function similarly to regular credit card purchases. During standard checkout procedures you will see cryptos as a payment option and will be given directions there on how to make your purchase.
You might be surprised to hear that even some travel sights and airlines are accepting crypto purchases now, which really shows how popular it is becoming.
Dangers of Spending Cryptocurrencies
Some of the benefits of cryptos also double as their dangers. Remember how we mentioned that purchasers can’t reverse their orders from you without cause? Well, this also means that you, as a purchaser, cannot reverse transactions that are made with cryptos.
Anonymity of purchases can also make it harder to resolve any cases of fraud against you.
One of the biggest dangers of cryptos is that it is currently a huge target for cybercriminals. Since currencies are anonymous and not linked to personal info, they are the perfect target for those who want to take money from others without being tracked down.
This is why it is so important to focus on security measures for using cryptocurrencies.
Security Measures for Using Cryptos
Use a Reputable Wallet
Using a reputable wallet for your cryptocurrencies is vital to ensure that your transactions are monitored correctly. You would hate to make a purchase and see double the amount you spent missing from your wallet!
Use a VPN
Virtual private networks are the pinnacle of digital security. Using top rated VPN services is a great way to ensure the safety of your digital currencies. These services encrypt your data, provide you anonymity, and create a secure tunnel for all data to pass through.
Double Check Addresses
An easy measure to help secure your crypto transactions is to double check the address you are sending your transactions to.
Always use two-factor authentication to ensure that your cryptocurrencies aren’t accessed by unauthorized users. Two-factor authentication protects you by making it so a hacker would not only have to ascertain your password, but also a time-sensitive code.