Practical Applications And Challenges Of Cryptocurrencies

The underlying technology behind the working of cryptocurrencies has led to the generation of many real-time applications where these currencies have exploited in a positive manner. However, with great advancements come greater challenges. Thus, this article will thus throw light on the different applications of digital currencies and some of the major challenges that cryptocurrencies face today.

Applications

Below are some of the widespread applications of cryptocurrencies.

  1. It is used in the place of slow paying systems such as payments across national and international borders, exchange of reward tokens, and in funding systems.
  2. It is used to generate profits in the form of cryptocurrency trading activities.
  3. In addition to being used in many of the financial transactions, cryptocurrencies with the help of the secure Blockchain network is used to carry out different non-financial transactions.
  4. It is widely used in clearing and settling of collateral and in the management of collateral across borders.
  5. It also finds great use in the field of healthcare and transportation in terms of cost efficiencies, regulating offsets, and handling security and technical difficulties.
  6. There is an immense potential of cryptocurrencies in the field of asset management.

Challenges

  1. Cryptocurrencies will have a tough time trying to displace and compete against the traditional currencies such as Dollar, Yen, Euro, and others, which are the natural monopolies in their respective countries and some even across the globe.
  2. Cryptocurrencies will have to find new ways to supersede over the government-issued fiat money in terms of the profits that have been earned by the government through money minting. In addition, cryptocurrencies will have to generate profits by finding an optimal balance between the face value of the digital currencies and their production costs.
  3. Apart from the challenges faced by its traditional counterparts, cryptocurrencies are facing bigger challenges in terms of market volatility.
  4. Cryptocurrencies are also facing trials from its technology side and from its mining operations in terms of costs and data hacking.
  5. Moreover, the irreversible nature of cryptocurrency payments is now acting against it, as it is raising concerns against its nature of recourse.
  6. Although the Blockchain network is a highly safe and secure, cryptocurrency exchanges systems are facing threat of infiltrations from some of the expert hackers. This is ultimately resulting in greater financial losses.
  7. Moreover, it has been forecasted that the next challenge that cryptocurrency regulators will face is in its anonymity feature.

However, all these challenges are being addressed with the introduction of safer and more improved mining and trading software such as Bitcoin Loophole.