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Cryptocurrency faced a lot of challenges because of the lack of Rules. It is for the government to make some rules for cryptocurrencies to protect people from criminal activities like scams and frauds. Reason behind challenges- It is tough to keep an eye on cryptocurrency transactions because there are no clear rules in place. Regular money systems have bosses who make rules, but cryptocurrencies do not have that. This makes it hard to create fair and consistent rules for everyone full stop because of this, fraudsters find it easier to do illegal things like hiding money or helping terrorists using cryptocurrencies. Cryptocurrencies do not have many strict rules, and this is a big reason more people do not use them widely. Some people might be worried about putting their money into something that is not regulated. Also, because of the lack of rules, it is tough for the places where you can buy and sell cryptocurrencies to keep people safe from money crimes and cheating. But the rules should not be too strict, so the latest ideas can still happen and grow. Challenges faced by cryptocurrencies – Anonymity and pseudonymity: Cryptocurrency transactions do not show who is sending or receiving money like traditional banks do. Instead, they use special codes called wallet addresses. These addresses can be made without revealing who you are. This makes it hard to know where money is coming from or going to, especially if something fishy is happening. Tracking across different blockchains: Various kinds of cryptocurrencies and the computer Networks they use vary and how easy it is to see what is happening. This makes it tricky for banks and people who make rules to watch and figure out if something suspicious is going on. It is especially hard when people are moving money between distinct types of cryptocurrencies or blockchains. Uncertain taxes: Different governments tax cryptocurrencies differently. Before investing, people should know about the taxes they might have to pay. Clear tax rules will make the market more stable and encourage more people to use cryptocurrencies. Security worries: Storing cryptocurrencies in digital wallets can be risky. To protect their digital money, investors should use strong passwords and extra security measures. Cryptocurrency exchanges should also be secure, and using safe wallets is important. Over time, security should improve. Cannot undo transactions: Once you send cryptocurrency, you cannot cancel it. This means you need to be careful with your transactions and do proper research before investing. Difficulty with lots of transactions: Cryptocurrencies can struggle with handling many transactions quickly. This might lead to slower transactions and higher costs. Developers are working on solutions to make transactions faster and Cheaper. Merchants not using cryptocurrencies: Many businesses avoid cryptocurrencies due to their uncertain value and lack of rules. If more businesses accept crypto currencies, it would be easier for people to use them for shopping. Governments could encourage this by supporting businesses that accept cryptocurrencies. Network problems: As more people use cryptocurrencies the technology they run on can slow down. This might affect how quickly transactions happen. Developers are creating modern technology to speed things up. Lack of trusts: People need to trust cryptocurrencies more to use them widely. Educating people about their benefits, along with good oversight by governments and better security measures, can help build trust. In simpler terms, there are challenges like unclear taxes, security risks, irreversible transactions, slow processing, and lack of trust. But governments, developers, and businesses are working to make things better and make using cryptocurrencies easier and safer. Techniques to overcome from these challenges- Blockchain analysis: This technique uses computer analysis to follow the path of cryptocurrencies and figure out who is involved in suspicious transactions. It helps catch things like moving lots of money or dealing with criminals. But it needs experts and special tools. Behaviour- based monitoring: This method looks at how people use cryptocurrencies and spots any strange or unusual actions. For example, if someone suddenly starts doing lots of transactions, it might be suspicious. It is good at finding new kinds of problems but can also make mistakes. Peer- to- peer analysis: This way involves checking on peer-to-peer exchanges, where people directly trade cryptocurrencies. Criminals like these exchanges to turn digital money into regular money. By watching these exchanges, we can stop illegal activities. Risk- based monitoring: Here, each transaction is given a “risk score” based on things like how much money is involved or where it is happening. If a transaction seems risky, it gets more attention. This helps catch problems while making sure regular transactions go through quickly. It also helps avoid too many mistakes. Machine learning and AI: These are smart computer technologies that are becoming useful in watching cryptocurrency transactions for suspicious actions. They are great at handling lots of information and finding weird patterns that humans might miss. Machine learning uses past info to learn what suspicious things look like. It can automatically highlight transactions that match certain rules, like big money transfers or dealing with known criminals. When something is flagged, a person checks if it is really a problem. Note: To make these technologies Work best, banks and regulators need to use them and have people who understand how they work. They should also keep making them smarter to keep up with the latest problems in the cryptocurrency world. In simpler terms, there are separate ways to keep an eye on cryptocurrency transactions to spot criminal things like crime and cheating. They use computer analysis, watch how people use cryptocurrencies, check special exchanges, and assign risk scores to transactions. This helps keep cryptocurrency safe and fair. Conclusion- Keeping an eye on cryptocurrency transactions is tough because of the lack of clear rules, hidden identities in transactions, and trouble following transactions between distinct types of cryptocurrencies. But there are ways to handle these challenges. Techniques like blockchain analysis, watching user behaviour, checking peer-to-peer exchanges, risk- based monitoring, and using machine learning and AI can help. Banks and regulators should use a mix of these techniques to make sure cryptocurrency transactions are watched carefully and to lower the chances of financial crimes happening. This way, cryptocurrencies can become safer and more reliable for everyone involved.

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Explore the challenges facing cryptocurrency and how they can be overcome

Cryptocurrency faced a lot of challenges because of the lack of Rules. It is for ...

ByDeepika

Nov3