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   Introduction            This essay focuses on the new currency that is growing in population and becoming topic of everyday’s communication. Most likely the majority of people already heard about it  or have a friend, relative or a college that is into cryptocurrencies. There are different perspectives towards this new trend, some people believe that cryptocurrencies are future currency of the world , others think that it is just a bubble that is about to burst and some of them are just not willing to risk their time , money and effort for something unpredictable as well as insecure. Cryptocurrencies are different from the fiat currency known to everyone by now(Miller, 2016). What sepparetes fiat and cryptocurrencies are decentralization and cryptography which creates a currency that is shared witihn society and is not controlled by an instutuion and that is why goverment is resistant to accept it, reason being the lack of control. (Miller, 2016).   Defintion             Until now society was fimilair only with payment methods in the shape of cash, credit or debit car, paychecks and transactions between bank accounts. Cryptocurrency is a new term and to understand how it works one has to do a lot of research. In short cryptocurency is a digital and anonymus currency that works in the environment without need for an intermediary  (Ciu, 2017). Cryptocurrencies are built on the use of cryptography, a field using complex mathematics that makes cryptocurrency transactions anonymus, safe and possible without involving third party in the money transaction process(Narayanan, 2015). First digital currency appeared in the 1990’s, but the topic remeined mostly untouched until the year of 2013 when Bitcoin shocked the world with a massive increase in price and therefore gained a lot of attention (Miller, 2016)   Decentralization            The problem of the conventional currencies is the lack of trust in banks (Maurer, 2013).  Trust is esential component of bank-indivual relationship since banks are responsible for holding money, making elecronic transactions and additionaly lending this same deposited money to other indviduals or business with a minimum proportion of it in reserves (Maurer, 2013). This is where cryptocurencies become favorable option because of complete decentralization resulting in fact that users do not need to trust a person, bank or any instituion but one must solely trust an mathemtical code or more accurately the cryptographic algorithm (Maurer, 2013). Likewise, decentralization diminishes risk of a failure with spreading the ownership and control to the public (Maurer, 2013). Cryptocurencies might mark the end of era in which intermediaries make profits not only for storage, but also for the movment of values (Maurer, 2013) Risks As stated in the introduction, society has different perspectives on cryptocurrencies and the ones who think that it is just a bubble that will burst are supporting their statment with following arguments. One of them being fluctuation in prices of cryptocurrencies (Fry, Cheah, 2016). Prices of crypto currencies are changing all the time and this makes a very unpradictable market where some will make profits and others will lose a fortune (Fry, Cheah, 2016). Although decentralization is an advantage of cryptocurrencies since it makes it almost imposible to shut down, in case of government’s severe measures matching criminal with cryptocurrencies might cause a crisis of confidence and a breakdown in value of cryptocurrencies (Grinberg, 2011). Concern about anonymity and lack of control by government is another important issue because it might encourage illegal activities and terorism(Fry, Cheah, 2016). Benefits            Cryptocurrencies have a comparative advantage when it comes to micropayments (Grinberg, 2011). Because of low transaction cost compared to credit cards or Paypal, cryptocurrencies are more likely to be used for micropayments(Grinberg, 2011). Digital curencies also give freedom to individuals willing to involve in financial activities on international level with same terms and rights regardles of the place of residence( Frunza, 2016). Although mentioned that cryptocurrencies are unpredictable and unstable for now there are a lot of people that profited on a big scale  and made a fortune just from investments in digital money  (Maurer, 2013). Assuming it is the next big thing after the internet, majority of indivudals might get wealthier thanks to cryptocurrencies. (Maurer, 2013) ConclusionCryptocurencies are a new modern storage of value and a new payment system. A decentralized system that is not controlled by government. The future is unkown and only time will bring the answers. Taken into account all arguments mentioned above cryptocurrencies irrespective of wheter they become a future payment method or the bubble bursts, brought a challange for the economy, a new technology that will improve financial system in the long run. It motivate’s banks to reduce transaction costs or to adopt the technology used by cryptocurrencies. In any case society and the financial system of today’s economy is on a verge of some big changes. 

 

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