Crypto-currency
Nowadays, some businesses around the world have started accepting the cryptocurrency as a means of payment for their goods and services. For instance, Bitcoin is the most broadly used type of crypto-currency having the biggest market capitalization. It is traded on exchanges as well as via retailers (Nakamoto, 2019). Again, Bitcoin can be purchased, traded and sold through online exchanges. So, most of the business find it cost-effective in terms of making payments for their products. As long as this form of crypto-currency is bought then it can be stored within these exchanges otherwise in the computers of users in digital wallets up to the point they are converted to fiat currencies (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020). The conversion towards a recognized currency shall often be done through an exchange that shall eventually need an account being held with the conventional bank. This is an instance which shows how crypto-currency is connecting with the entities which are regulated like banks (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020).
However, other businesses are rejecting the use of cryptocurrency as a standard form of currency due to risks which are involved in using it. Monetary authorities and central banks globally have issued warnings to consumers on Bitcoin use. They are citing different security and price risks. The value of Bitcoin may dramatically fluctuate anchored on various factors as of the popular trends to interventions of government in the trade as well as vast amounts of money which are lost swiftly in this mode of payment (Nakamoto, 2019). For instance, last year, the Chinese government made a restriction on cryptocurrency trade by using financial institutions in the country (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020). This caused Bitcoin values to go down by half overnight. Another risk feared by some business towards taking into this form of trade is that digital wallets are susceptible to hackers. In several cases, computer equipment might be stolen thus making the crypto-currency to be in the hands of hackers. Additionally, Bitcoin lacks transparency as well as the inability of complying with the legislation on counter-terrorism and anti-money laundering (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020).
Most crypto-currencies run on blockchain technology. This is a digital ledger in which it becomes hard for one to tamper with the running activities. It is decentralized since there is no central authority which has been initiated to be governing cryptocurrency. However, miners having computers with high powers often work towards verifying transactions via multifaceted cryptography. The times of transactions around Bitcoin have spiked due to the frenzy surrounding it (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020). This is going against the preliminary goal of the cryptocurrency.
Ethereum is similarly running on the blockchain technology, which was created by ether. Nowadays, ether and Ethereum are interchangeably used in referring to crypto-currency (Lee & Kim, 2020). Just as mentioned, ether is similarly supported by the block-chain as Bitcoin. However, the technology for ether is fairly different and is aiming at particular case utilization, which is a smart contract. Ether is needed by developers building applications on Ethereum blockchain as well as users who need the accessibility of interacting with the platform of smart contracts (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020).
Litecoins is seen as the closest rival of Bitcoin about case usage. It is employed for payment purposes mostly than Bitcoin since it is faster. Most of the transactions take approximately two minutes to be completed as to match 300 minutes of the transaction for Bitcoin. The supply of Litecoins is limited up to 84 million as compared to that of Bitcoin which stands at 21 million (Nakamoto, 2019). There are over 54,290, 540 Litecoins which are in circulation as compared to that of Bitcoin which stands at 16,740,176 (Malfuzi, Mehr, Rosen, Alharthi, & Kurilova, 2020).
References
Nakamoto, S. (2019). Bitcoin: A peer-to-peer electronic cash system. Manubot.
Jalali, M. F. M., & Heidari, H. (2020). Predicting changes in Bitcoin price using grey system theory. Financial Innovation, 6(1), 1-12.
Malfuzi, A., Mehr, A. S., Rosen, M. A., Alharthi, M., & Kurilova, A. A. (2020). The economic viability of bitcoin mining using a renewable-based SOFC power system to supply the electrical power demand. Energy, 117843.
Lee, S., & Kim, H. (2020). On the robustness of Lightning Network in Bitcoin. Pervasive and Mobile Computing, 61, 101108.