By Walaa Al Farwi
To this day, many people around the world still do not understand what cryptocurrency means, or how it operates. While some people have become wealthy as a result of investing in this digital monetary unit over the last decade, many others still do not believe in it or simply do not trust it. But what exactly is cryptocurrency and trading with it, and what impact does it have on Hungary’s financial life?
To put it simply, crypto is a digital currency, in which transactions are verified and records are kept by a decentralized digital system, rather than a centralized authority utilizing encryption. In other words, giving someone a complete control over their own money. Bitcoin was the first digital money, created by Satoshi Nakomto in 2009, and has since become the most well-known and profitable cryptocurrency. Those who believed in this crypto from the beginning and invested in it have become millionaires today, as Bitcoin’s value has reached an all-time high of more than $75,000 per Bitcoin. However, Bitcoin is not the only trusted online currency: there are also numerous other influential players in the cryptomarket, including Ethereum, Cardano, Polkadot, Binance coin, Stellar, and many more. There are also less serious ones present, also known as ‘meme coins’, such as Dogecoin, Shiba and Whalefall.
But, with such a diverse offering, you might wonder where their success lies. Many people have difficulty trusting banks and are concerned about having all of their assets in the hands of powerful people, but crypto solves this problem by ensuring that your money is not powered by a human being. In other words, it is not governed by a central bank or other monetary authority. Cryptocurrencies are all virtual and are regulated by machines and nodes, making it easier to send money without carrying a wallet with you. Unlike traditional money, which takes time to deliver, crypto is received and distributed instantly. It is also less expensive to transmit money around because banks normally charge transaction fees, which makes a significant difference, particularly for low-income people.
You do not need a specific background, job, or status to open an account, providing many people the freedom to have and hold money however they like. Cryptocurrencies may also provide a reasonably safe store of wealth because they cannot be printed or seized.There are also some fairly utopian ideals associated with cryptocurrencies, such as those believing it will abolish poverty and capitalism, which is why many from the richest socioeconomic class as well as banks see it as a danger. However, in reality, it is more accurate to say that cryptocurrency is a more equitable and transparent financial system.Furthermore, because of its self-government and management, security, privacy, and ease of capital transfer, bitcoin and its company may help to protect inflation. Transmitting of money is thus not only as quick as lightning and cost little to nothing, but are also far more secure than normal electronic transactions.
Nonetheless, as much as there are benefits to using cryptocurrency as a currency, there are some drawbacks too. Although the benefits of cryptocurrency mostly outweigh these flaws, it is always important to remember that there is risk in using digital money. Firstly, cryptocurrency is vulnerable to hacking, and just as our bank accounts may now be hacked or stolen, so can our crypto wallets. Although it is very secure and supported by a strong blockchain, making hacking extremely difficult, it is not impossible or unavoidable.
Another disadvantage of bitcoin is that it is often used for criminal behavior in many countries because the authorities cannot track users down through their wallets and addresses. And, since governments lack the authority and access to this type of information, cryptocurrencies are attracting more illegal activity. This also means that power is concentrated in fewer hands, which can be viewed as both a plus and a disadvantage. On the one hand, cryptousers’ background, race, situation, or status have no influence on their capacity to utilize the money. When it comes to creating a bank account, however, a status is required. In some nations, race, background, and status all influence someone’s ability to get a bank account, making it unfair for many people.
Cryptocurrency in Hungary
In Hungary, cryptocurrency is legal and can be used for a variety of purposes, including purchasing products and services and investing. Bitcoin is recognized as a “virtual currency” by the Hungarian National Bank, although its use is neither regulated or supervised. There are also a few exchanges and platforms where individuals can buy and trade their cryptomoney, such as Coincash.eu, Bitpanda, and Coinmama. However, individuals should conduct their own research and carefully consider the risks before investing in cryptocurrencies, as the Hungarian government has issued warnings about the potential risks.
Furthermore, in order to comply with EU anti-money laundering (AML) regulations, Hungary has implemented new regulations on cryptocurrency exchanges and service providers. These rules include required KYC (know your customer) checks, the reporting of suspicious transactions, and the maintenance of appropriate documentation. Overall, while cryptocurrencies are legal in Hungary, individuals should be cautious and thoroughly research before investing, and companies must comply with the appropriate regulations.