The term cryptocurrency is used a lot lately. You may wonder what is driving some people to seek these currencies out instead of using traditional government-backed currency. Privacy is one of the major factors driving cryptocurrency development, and this may be a road to improving online identity safety.
While the basic concept of all cryptocurrencies is similar, and many of them can be purchased at exchanges like the one at https://rubix.io/eth-usd, there are many things that make them very different. Here are a few of the privacy concerns that have led some people to seek to use cryptocurrencies instead of more traditional financial tools.
As more of life is lived online, privacy has become an ever-more-important consideration in daily transactions. When you hand cash to someone or even give a merchant your credit card, there is some connection between the participants and some level of trust. Cash gives you anonymity because of its completely portable nature. Of course, this also lends it to being stolen with little to no recourse. Proving ownership of cash is nearly impossible.
Credit cards are less private, as they are tied to an individual through a trail of data. This makes them more susceptible to fraud by bad actors who are a little more tech-savvy. This is where many of the concerns about online identity fraud and theft have originated. Putting your credit card information out there is the easiest way to complete online transactions currently. Unfortunately, it also places your financial health at risk from anyone who might intercept that information.
The idea behind cryptocurrency is that it is a software-based currency that can be identified as yours without leaving a trail of information that could lead thieves back to you. One way to think of it is like a checking account that has a different account number every time you use it. The recipient gets their money, and the sender is safe from anyone who would want to trace that currency back to them.
Rather than having the receiver – often represented by a credit card company or bank – verify that the money being sent is real, there is a network of individuals using their computers to verify that the money is real, originated from the right place, and ended up in the right place. These individuals are rewarded with an amount of cryptocurrency themselves through a process known as mining. If their computer is the one that does the verification, it pays off for them, so they keep doing verifications. The more computers that are working on these verifications, the safer the system is.
While a lot of the concepts and terminology surrounding cryptocurrency sound new and confusing, the idea of a safe and private currency certainly isn’t. If you’ve ever wondered what a cryptocurrency has to do with you, just know that it might be a path to a safer online world. If using cryptocurrency isn’t interesting to you, knowing a little bit about it and how it can change the financial world can be beneficial. That way if you run across a reference to crypto you can have a better idea of what is being discussed.