Cryptocurrency news covers developments in virtual currencies such as Bitcoin that run on decentralized computer networks. These cryptocurrencies use cryptography principles to mint coins and exchange them with people who have virtual wallets on these decentralized networks. These transactions are then recorded publicly on tamper-proof distributed ledgers, known as blockchains. They also eliminate the need for centralized intermediaries such as banks and monetary authorities to enforce trust and police transactions between two parties. This new system, dubbed DeFi (decentralized finance), is attracting a lot of interest from investors, who invest in them to profit from price appreciation and as an alternative to traditional financial instruments such as stocks and bonds.
Proponents say this new model of money is more secure than traditional fiat currencies and provides a means to move funds quickly and anonymously across borders without the need for a third party such as a bank, which can block or charge fees. Critics, however, argue that cryptocurrencies empower criminals and terrorist groups, fuel inequality, suffer from severe market volatility, and consume large amounts of energy for mining operations that have contributed to climate change.
Regulatory authorities around the world are struggling to craft rules for this emerging sector, which can be difficult to classify and regulate as either securities or currencies. Investors face a number of risks, including the risk that their investment will be seized by a government agency or that they could lose it due to hacking and bugs. Additionally, many investors and merchants rely on third parties to store or trade their cryptocurrency, which leaves them vulnerable to those firms’ failures.