What Is Cryptocurrency? Today's Digital Currency

Who is still not familiar with Cryptocurrency or cryptocurrencies? Since the sophistication of digital technology has grown in the last decade, modern currencies and payment systems have also felt the impact of existing technological developments.

 Cryptocurrency is a decentralized digital currency based on blockchain technology. Simply put, cryptocurrency is a currency used in digital payment systems without having to go through a verification process from a bank to carry out transaction activities. When digital transactions are made using cryptocurrencies, the transactions will be recorded in a system called a blockchain. This blockchain technology is known to have a very complex recording system and a non-centralized nature. This advantage of blockchain is what makes it very difficult for external parties to hack or hijack.
The cryptocurrencies used in the digital payment system are stored in digital wallets in the form of hardware (device) or computer programs (software) that store private and public access keys. This digital wallet that is used to store cryptocurrencies will give users access to crypto funds stored on the blockchain.

Cryptocurrencies work like regular currencies which can also be used to buy goods and services. However, more people choose to use cryptocurrencies as an investment asset as they invest in stocks or precious metals. As an attractive new investment opportunity, cryptocurrency is still included in the category of investment with high risk due to its highly volatile price.

The high risk of Cryptocurrencies is equal to the prospect of profit that may be obtained in the future. People who invest in cryptocurrencies believe that this currency will be the primary currency used in the future. Therefore, they are competing to buy and invest early before the value gets more expensive in the future.

Another possible prospect for investing in cryptocurrencies is that this digital currency has little chance of experiencing inflation. It is because there is no central bank that acts as the authority for managing digital currency circulation at the present. So that no single authority has been able to reduce the value of this digital currency.

Currently, there have more than 13,000 different types of cryptocurrencies or digital currencies traded around the world with a total value of US$2.5 trillion or equivalent to Rp. 35 quadrillion. The most popular and high-value cryptocurrency is Bitcoin. Where 1 bitcoin is equivalent to a value of Rp. 845 million. The types Ethereum and Binance Coin in Cryptocurrencies are the second and third most popular with 1 coin worth IDR 56 million and IDR 6.5 million, respectively.

In Indonesia, the number of investors in cryptocurrency assets has reached 6.5 million people based on data from the Ministry of Trade (Kemendag) at the end of May 2021. The number of digital currency investors in Indonesia increased by more than 50% compared to 2020, where Indonesia has only 4 million cryptocurrency investors. But in Indonesia specifically, there are only about 229 types of cryptocurrencies or digital currencies registered with the Commodity Futures Trading Supervisory Agency (CoFTRA).

But keep in mind, even though investing in cryptocurrency assets has good prospects and promising profits, as investors, we still have to be careful and study depth about how digital transaction systems work, especially on the blockchain. This is vital thus the investment decisions will not be taken speculative. Because it has the potential to cause huge losses if they are not considered carefully and thoroughly.

So, are you interested in investing in cryptocurrencies?