Benefits and risks associated with virtual money
With the passing years, the development in technology has been overwhelming. From sending manned missions to space to watching the movements of a baby in its mother’s womb – technology has made it all possible. Undoubtedly, the significant development in technology with every passing day has changed the world as we know it and the same impact has been seen with money. While using gold, silver and other metals as currency was prevalent even a century back, the present generation is moving from paper and online money to something quite different – virtual money – a digital money that is code generated and regulated.
Virtual Money, benefits and risks
The reason why virtual money was conceptualized and then, generated was because it had a number of significant benefits like:
1. Less inflation – Since most of the digital currencies that have been developed have a limit on the number of units that can be generated, the effects of inflation are hardly seen as with real money that we use today.
2. Less risk of collapse – Unlike real money, virtual currencies are not affected by socio-economic and political scenarios. Thus, their value hardly changes over time, let alone a total collapse, unlike real money.
3. Simple and cheap – Transfer of virtual currencies does not require any intermediaries; they can be sent directly from one person to another within the currency system. This makes it easier to make transactions and the cost of the transactions also reduces significantly.
4. Safe to carry – Unlike cash or cards, you needn’t carry anything material. You can have the money stored electronically and use it whenever needed.
Though the virtual currencies come with a number of benefits, they aren’t totally risk free. As with any other money system, they too, have their own shortcomings like:
1. Untraceable – Virtual currencies are generally decentralized and thus, it isn’t possible to trace their source or use, making it easier for criminals, fraudsters, etc. to carry out unscrupulous activities without any detection by the regulatory authorities.
2. Difficult to use – Till now, very few merchants allow the use of virtual currencies to buy products or services. So, having a lot of it won’t help you in most situations.
3. Difficult to trade – Unlike e-wallets or other third party services, transferring virtual currency to real money and vice versa is very complicated. Only a few providers offer such services and they too, either charge high or are shady organizations.
4. Can be lost easily – Though there are ways to recover cash or online money, there is practically no way to do so in case of virtual money. Once you lose the money, you lose it for forever, with no chance of a recovery.
Considering the above factors, it wouldn’t be quite wise to start using virtual money as yet. They are new and promising, so it would be better that you invest in them and cash in the benefits at a later time when they stabilize and become more popular and be accepted by all. Doing this will ensure that you have a good investment ready for your future.