How Crypto Works in the Financial World

Cryptocurrencies or crypto currency is a means of payment accepted in many countries. The way crypto works in the financial world is quite simple, almost the same as stocks.

Cryptocurrency like Bitcoin is not only used as a means of payment, but also as an investment. Otherwise, the value of digital currency assets, especially Bitcoins, has increased hundreds of percent in the past year alone. 

The phenomenon of traders is growing because these digital currencies intrigue people and eventually capitalize on them. Cryptocurrency payments made peer-to-peer directly from sender to receiver.

Many cryptocurrencies use a decentralized network based on blockchain technology. Blockchain itself is a distributed ledger implemented by various computer networks.

These cryptocurrencies are not issued by government financial authorities, so cryptocurrencies cannot be “disturbed” by the government in principle. However, there are still many beginners who don't know how crypto works.

Explanation of How Crypto Works

How crypto works can be traded by anyone anywhere in the world. You can only trade this cryptocurrency with your mobile or PC. Investing in this currency is a bit different from other investment products.

When transacting, the sender and receiver of digital currency receive transaction information. Transactions are also signed digitally using the private key of the digital currency system.

Confirmed transactions are stored permanently. Neither party can modify or manipulate this transaction.

The Ministry of Commerce officially allowed 229 crypto assets through BAPPEBTI (Commodity Futures Trading Regulatory Authority), which means many assets that can be traded in Indonesia.

This is contained in CFTC Regulation No. 7 of 2020 to establish a list of crypto assets that can be traded on the physical crypto asset market in Indonesia.

Disadvantages of Cryptocurrencies

Here are some of the weaknesses of cryptocurrencies that you should know after knowing how crypto works above.

Uncancelable Transactions

Irreversible indicates that all transactions made cannot be undone. The currency sent will be given to someone else and cannot be returned or frozen. Refunds can only be made if the recipient is willing to return the digital money. 

Also read: Easy Crypto Mining Tricks For Beginners, Do This!

Limited Quantity

It is clear that the number of issued cryptocurrencies is limited. Therefore, the currency will tend to go up, but it might also go down.

Moreover, it is difficult to predict the ups and downs of this digital currency. It would be better if you only use it for fast transactions. 

Accounts Can Be Lost When Forgot Password

Having a wallet is an important consideration when investing in cryptocurrencies. Even though it is part of a technological revolution, its use also depends on who is driving it. If you forget your password while using the wallet, you will no longer be able to access your cryptocurrency.

Also read: How to Play Crypto Without Capital, Definitely Cash!

So, above is a basic explanation of digital currency and how crypto works. Since cryptocurrency is a new form of money, you need to understand the technical details of the cryptocurrency you want to own.