Advantages and disadvantages of cryptocurrency

Like every other thing, cryptocurrency also has its advantages and disadvantages. Let’s discuss them in detail.

Advantages of Cryptocurrency

An opportunity to earn

Just like other currencies, you can also trade cryptocurrencies. There have been several people who have lost money, but there have also been people who have made fortunes using cryptocurrency. If you play cautiously, you can earn a fortune by investing in cryptocurrency. However, you need to know exactly how the market works before investing.

Inflation protection

It’s the inflation because of which the value of several currencies has declined. However, you won’t notice this with cryptocurrencies. All the cryptocurrencies are released in a specific amount. For example, in total, there can only be 21 million Bitcoins. So, when the demand increases, the value of the currency also increases. It will help in keeping the market up and will thus prevent inflation.

Security & Privacy

Although security has been a big concern when it comes to cryptocurrency, it’s still very well protected. The data is stored in nodes within the blocks stored on a network of computers. Because of this, hacking into a computer or stealing someone’s identity is extremely rare.

Cost-effective global means of transaction

When it comes to receiving or sending money online across countries, it can be quite expensive. For example, PayPal deducts over 5.2 percent fee to receive money. This number can sometimes vary from country to country. However, you won’t have to deal with such huge numbers while transferring money using cryptocurrency. It’s because there’s no requirement for a third-party verification which is why the traction fee is minimal.

Lightning-fast way to transfer funds

With traditional methods, the banks, transferring money is a hassle. Sometimes it’s instant, while it can take seven businesses days on some occasions. However, this is something you won’t ever experience with cryptocurrency.

Cryptocurrency aims at offering and replacing the present payment system because of which the transactions are processed almost immediately without requiring any extra verification or validation. This is what makes transferring money both nationally and internationally a walk in the woods.

Disadvantages of Cryptocurrency

Let’s look at some disadvantages of cryptocurrency:

Illegal usage

You get privacy with cryptocurrency. It means absolutely no one can access your identity. However, this can be an open invitation for people wanting to perform illegal transactions.

Partially decentralized

Yes, cryptocurrency is said to be decentralized. But is it completely true? Nope. It’s because the creators of cryptocurrencies can somehow control the prices and availability of cryptocurrencies in the market. And this is a matter of concern.

Loss of data means loss of money.

The developers and creators use a complex technology, which is untraceable, to ensure the privacy of its users. But what if you somehow lose your private key? Well, it means you lose all your money. It’s because generating a new key is almost next to impossible. However, you can handle this problem/issue by taking up multiple virtual and physical backups.

Yet not mainstream 

Although some countries have allowed cryptocurrency transactions, it’s still not mainstream. You cannot just visit any grocery owner and pay in Bitcoins. And this is what, sometimes, demotivates the users from using cryptocurrency.

Unavailability of some coins in fiat currencies 

Some cryptocurrencies cannot be directly converted to fiat currencies. You need to first convert that cryptocurrency into a popular one like Bitcoin and then convert it into Dollar, INR, or Pound. And this can increase the transaction charges costing you more money.

The above disadvantages can be defined as temporary. It’s because for the developers to bring cryptocurrency into the main context, they have to deal with all of the above disadvantages. So, it’s highly likely that in the years to come, you won’t see many disadvantages of cryptocurrency. Many experts consider this as the future of our financial system.