Key properties of cryptocurrencies
Centralization occurs when the concentration of power is conferred on a single central authority or institution, while the opposite is decentralization. In the case of a decentralized network, power is distributed equally among all people participating in the network. When it comes to cryptocurrencies, these digital currencies are generated and traded on a decentralized blockchain platform. Therefore, they eliminate any central authority and third parties in the issuance of the currency. The elimination of the central authority stabilizes the currency even in the event of adverse economic situations.
The cryptocurrency is generated and registered on the blockchain platform. Blockchain platform blocks are connected using cryptographic techniques. Therefore, it is not possible to modify transactions already posted. In the case of banks, if there are any fraudulent transactions, the bank has the authority to rewrite the ledger. In the case of cryptocurrency books, it is not possible to make a mistake or fraud because it would not pass the filter of the consensus algorithm. In addition, the ledger is distributed and everyone has a copy of the transactions made, making it impossible to alter them.
You don't need trusted third parties:
Trusted third parties are not required to set up a transaction. Cryptocurrency platforms are designed in such a way that you do not need to trust any person or entity for the operation of the network. Everyone on the network has a ledger and one does not need to trust anyone to validate whether the transaction is valid or not because we can check the ledger ourselves. The incentive of the individual miner on the network through different consensus algorithms makes the network work honestly.
Cryptocurrencies like Bitcoin use the Bitcoin address to transfer funds from one person to another. These Bitcoin addresses are not linked to an individual's contact details in any way publicly. Therefore, they can guarantee the anonymity of the user.
Once the cryptocurrency is deposited in a wallet, the coins can be authenticated only with the user's private key. This private key is a long alphanumeric number and is impossible to decrypt. Therefore, the private key ensures a very safe environment for our currencies in the wallet. That said, if the private key is lost, the coins are lost forever and cannot be recovered. Therefore, it is advisable to safeguard your private key.
Cryptocurrencies are deflationary. For example, Bitcoin has a maximum of 21 million coins. Coin production becomes more difficult as times go on, and supply would be lower, limiting supply. When we limit the amount, inflation decreases automatically. For coins with an unlimited supply such as Ethereum, Monero, etc. the supply is limited by the new annual issue. Thus, currency production is controlled, keeping inflation at bay. Therefore, we can say that cryptocurrencies are deflationary in nature.
All these properties allow cryptocurrencies to be a revolutionary alternative currency stream and eliminate the fundamental problems we face with today's banks and fiat currencies.