What are Cryptocurrencies and Why Use Them?

Even those that have never used them have at least heard of cryptocurrencies, although they may not have ever even heard that term. But chances are that in the next several years, people will start becoming even more familiar with these currencies, just as more people are starting to become familiar with Bitcoin.

These digital currencies are becoming more and more popular. And while they were once thought to be complicated currencies that were difficult to use and buy, as more people hop onto the cryptocurrency trend, the complexities of them are being broken down. And that’s making cryptocurrencies more accessible to everyone.

What are Cryptocurrencies?

Cryptocurrencies can seem complicated at first, but this is mostly due to the new terminology that is associated with them.

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Cryptocurrencies are, first and foremost, digital currencies. This means that while they have value, they are not something a person can physically hold, as they can with actual bills and coins that can be put into a bank account. These currencies use a blockchain, which is a record of transactions that anyone using that particular cryptocurrency can see.

In order to create a blockchain, these digital currencies use miners. The heart of any miners job is to build the blockchain and confirm transactions. A transaction has not taken place, nor will it be recorded in the blockchain, until a miner has confirmed the transaction.

While the terminology used in cryptocurrencies can be confusing, it becomes easier to understand when you compare it to a conventional bank. Banks are really just large databases of transactions, people withdrawing, depositing, and sending money to another person or business. And in order for that transaction to take place, a banker has to confirm the transaction.

The only real difference is that with digital currencies, there is no physical cash or coin. And instead of going into a bank, those using cryptocurrency can make transactions using their smartphone or a computer.

Why Everyone Should Consider Using Digital Currencies

Even for those that thought they would never use digital currency, it’s something everyone should consider. Not only is using them much easier than it may at first seem, but using them could also offer real savings, such as in the case of marijuana seeds sold by those marijuana seed banks that offer discounts to those that do use them. Us here at MSNL offer 15% on Bitcoin Orders. Find out more by clicking here.

Pros and Cons of Using Cryptocurrencies

Of course, just like anything else, cryptocurrencies have pros and cons associated with them. And these need to be considered by anyone wishing to use them to buy from marijuana seed banks, other retailers, or those that just wish to invest in them.

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One of the biggest pros with digital currencies is that they are built completely from scratch. And when they are, it’s security and privacy that are top of mind for the creators. And when dealing with anything that has value, users most want to know that their transactions will be kept secure and private.

Another pro that digital currencies have over conventional banks is that anyone with access to the Internet and a smartphone or computer can start using them, and even making money with them. There’s not a lot of paperwork to fill out, and unlike banks, you don’t need a starting balance to open an account.

One of the biggest pros surrounding digital currencies is that they are decentralized currencies. And this makes it easier for those wishing to trade across borders. This decentralized system also opens up more options for those that don’t have access to other financial services, such as traditional banks. In addition to that, they also have smaller costs and fees associated with them than other digital banking options such as PayPal.

Of course, the biggest pro that comes with digital currencies is that they can be used to buy things like marijuana seeds. In fact, many marijuana seed banks will offer a discount to those using digital currencies to purchase their seeds because it’s so much easier and the transaction can be finalized so much sooner. Those buying marijuana seeds also often want their transactions to be discreet, which digital currencies certainly allow for.

With anything that has a list of pros, they typically have at least a couple of cons attached to using them as well. The first is that, for those who use them for business or taxable purposes, it can be unclear what taxes should be paid on them. This is because, due to the volatility of these currencies, many people wonder if they should pay taxes on the value of the currency when they first obtained it, or what it is at the time they do their taxes.

And that leads into another con of digital currencies - the frequency at which their value can fall or increase. In just one year in 2014 for example, the value of Bitcoin was anywhere between $30 and $1,000. While this mostly affects those that are investing in the currencies, and not using them to make purchases such as marijuana seeds, it’s still a downfall of using these currencies that must be considered.

Most Popular Cryptocurrencies

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So what are the different cryptocurrencies out there? When many people think of these currencies, they often think first of Bitcoin (BTC). Bitcoin was the original cryptocurrency, emerging to the market shortly after the 2008 financial crisis seen in North America. Being the original cryptocurrency, it’s still the most popular today. But as the world of cryptocurrency continues to grow, so too do the number of them that are available.

Bitcoin certainly does have some competitors and among them, Ethereum (ETH) is the largest. One of the biggest differences between Bitcoin and Ethereum is that Ethereum uses its own apps for transactions to be made. So not only is the entire system decentralized, as most digital currencies are, but the platform they use is also decentralized. And that helps Ethereum move further away from third parties such as Google and Apple.

At the end of 2017, Ripple (XRP) emerged onto the cryptocurrency scene, and even briefly overtook Ethereum as Bitcoin’s biggest competitor. Ripple isn’t exactly decentralized. It’s a network that actual banks use for money transfers just as they do with SWIFT. While money sent through Ripple is converted into tokens, or the cryptocurrency on the front end, it’s transferred into the currency of the user’s choice on the back end.

Cryptocurrencies offer so many other benefits that in this ever-changing digital world, they’re only going to become more popular. And that could mean that those who don’t get in on the trend early, could be left behind and trying to catch up as more of the world’s population continues to ride the digital wave.

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