One of the major advantages of recognized cryptocurrencies (for example, Bitcoin, Ethereum, Dash, etc.) is that they are based on blockchain technology, which allows them to have a decentralized and transparent system, however, another of their outstanding advantages is their high level of security when making transactions. In this article, we will explain why transactions in cryptocurrencies are safer than transactions in FIAT money.
The chain blocks (blockchain) used by cryptocurrencies allow digital data transfers, using sophisticated encryption that provides a high level of security for transactions. This system functions as a kind of “digital ledger”, and once information has been entered, it can no longer be deleted; the system will only allow “new records” to be added, therefore, said activity will not be legalized unless the majority of blockchain operators agree to approve the transaction.
The system only executes transactions on one unit at a time
With cryptocurrencies, if someone tries to carry out more than one transaction on the same block of cryptocurrencies, only one of them will be carried out since, unlike FIAT money, no more than one transaction can be carried out at the same time on the same asset, that is, a user could not make “duplicate” transfers or be buying cryptocurrencies and at the same time pay with them some other asset, without the first transaction having been approved.
To control its operation or the flow of money in transactions with cryptocurrencies, no entities, companies, or bodies are used that approve or reject the transactions, on the contrary, in the case of cryptocurrencies, it is a “distributed consensus” because all the people who have participated in the blockchain have decision-making power over the transactions that occur in it, this is due to the decentralized system of blockchain technology, which allows eliminating the intermediation of third parties, which allows their data to be easily accessible and reliable, in this way transactions do not require a centralized intermediary to identify and certify the information, since it is distributed in different nodes independent of each other, which register and validate the activity, without the need for dependency or relationship between them.
On the other hand, fiat money transactions require the approval of a central entity, bank, or institution; however, this may seem safer, the fact is that the number of people or participants in this process is limited, in addition to being a 100% internal or closed process, which makes it more difficult for it to be audited by external entities, this causes the percentage of error and non-transparency to increase considerably. In another way, with cryptocurrencies, the number of people or participants in this process are all those who integrate (and participate) in the blockchain, which, being decentralized and open, allows more external people involved, which makes it easier to detect an error or fraud.
Transparency and integrity of the data
The blockchain, being a shared database, the data will be available to users at any time during a transaction, providing the required transparency. Once the data is created, it cannot be deleted or altered; the users involved in a transaction will know everything that has been done, as required by the protocol agreed in the blockchain.
Time, incentives and lower costs
Transacting with fiat money can take several hours or days, especially while converting and waiting for the regulator’s authorization; in contrast, a transaction conducted with cryptocurrencies is completed in a shorter time, lasting from seconds to a few minutes; whereas in the traditional system used by fiduciary money, each intermediary charges a commission, which means that the system does not have a stimulus to be more direct, fast, and effective. In the case of cryptocurrencies, there are no intermediaries, and it structured the incentive in such a way that it rewards efficiency and speed in transactions.
What do you think about this topic? Do you know other reasons why cryptocurrency transactions are more secure?
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