Do you want to know the Advantages and Disadvantages of Cryptocurrency?
Cryptocurrency is one of the booming sectors of finance. Cryptocurrency is a novel market driven by technology having great potential in the future. If we try to put it simply, crypto is about the digitalization of money and transactions.
If we purchase a product, we pay the required amount of money for it. The concept of cryptocurrency is the digital form of money. Cryptocurrency uses a currency that has been digitalized for transactions. According to experts, the market of cryptocurrency will receive unfolding growth in the coming years.
An Introduction to Cryptocurrency
Now that its potential is recognized, cryptocurrency has been welcomed in the market. International companies like Microsoft, PayPal, Etsy, Starbucks, KFC, and Overstock, accept payments through cryptocurrency. In the digital finance world, the most popular types of currencies used are Ethereum (ETH), Litecoin (LTC), Cardano (ADA), Polkadot (DOT), Bitcoin Cash (BCH), Bitcoin (BTC), and Stellar (XLM).
Among all the other forms of cryptocurrency, Bitcoin is the most preferred currency. You can easily sell, buy, or transfer using cryptocurrency.
Cryptocurrency uses the technology of blockchain as a ledger. A ledger acts as a record of transactions and the history of other necessary data.
The blockchain used in the crypto market is a database that collects and evaluates data together in a group, called Blocks. A blockchain eliminates the editing of data; hence it restricts any alteration and deletion of data. Data can only be stored and distributed.
Crypto Currency is high in demand. Cryptocurrency has an approximate number of around 300 million users globally. Among the different types of cryptocurrencies, BITCOIN is the most used digital currency.
It is a novel technology having a lot of potential, but let us also consider the loopholes of cryptocurrency. Let us get a little deep into the advantages and disadvantages of Cryptocurrency.
Advantages of Crypto Currency
1. Crypto Currency Provides Protection from Inflation
Inflation causes a decline in the value of any traditional currency like the euro or dollar & results in rising prices of goods and assets. Simply put, inflation devalues traditional currencies. Higher inflation in any country weakens the value of its currency. Cryptocurrency like bitcoin is less prone to undergo inflation.
Most cryptocurrencies like bitcoin and Ethereum were launched with a fixed amount of coins. For example, bitcoin can never exceed the amount of 21 million units, a rise in demand in the future will never make the units get devalued. It resists change in the devaluation of units of any cryptocurrency in the long run.
2. Transactions and exchanges are easier & faster
With the launch of cryptocurrencies, money transfers are simplified to a great extent. Any cryptocurrency can be purchased using any traditional currency like the dollar, euro, rupee, yen, etc. Crypto transactions require no bank account for money transfers.
Not only does it make transactions easier, but using no third parties like PayPal and Visa, it also nullifies the transaction fees to the minimum costs. The verifications process used in the exchange of cryptocurrency requires little time which makes the transactions faster.
3. Crypto Currency is decentralized
The traditional finance of any country is governed or regulated by an organization. Most cryptocurrencies eliminate the requirement of third parties in money transactions.
Decentralization of finances contributes to reducing inflation in currency. The flow and value of currency are not dependent on any organization, which protects the security and stability of the currency.
Disadvantages of Crypto Currency
1. Volatility in Crypto Currency
Volatility is a measure of how much the prices have fallen or risen. The value of any currency used in crypto like bitcoin, Ethereum, etc., varies greatly. Every market depends upon a lot of factors that lead to its rise or fall among the other competitors.
Factors like supply & demand, regulations put by the government, etc., determine the rise and fall. Supply and demand are the most crucial factors in determining the volatility of the crypto market.
Political and economic factors have no major role in establishing the volatility of Cryptocurrency, which tends to have a big impact on traditional coinage. The value of any currency that is used in crypto like bitcoin, Ethereum, etc., varies greatly.
2. Lack of Regulations in Crypto Currency
One obstinate truth about the crypto world is that it lacks regulatory frameworks. No country currently has a strict framework that regulates exchanges in the crypto-world.
The US has a large number of investors, yet the country fails to own any regulations. Introducing regulations will make it a safer place for investors of cryptocurrency.
Apart from protecting investors, it will also aid in bringing stability to cryptocurrency. A regulatory framework will result in a decline in the count of frauds and other cyber crimes related to cryptocurrency.
3. Cyber Crimes & Frauds associated with Crypt Currency
According to a report, more than $1 billion has been lost due to scams and frauds in the crypto world. Tracking cybercrimes linked with cryptocurrency is a tough and tedious task.
Scamming is not the only drawback of Cryptocurrency. The information is secure, it provides a safe place for illegal trading like drugs which can not be tracked by government organizations.
Even if high security is provided, data and codes are always susceptible to hackers.
Conclusion of Advantages and Disadvantages of Cryptocurrency
Every person has his own ideas and experiences about exchanges by the means of cryptocurrency. One person might have gained a profit of thousands of dollars while one may have been a victim of an online scam.
We aim to show our audience the bright side of it while also focusing on the risks involved.
A large number of people prefer crypto transactions. Security associated with crypto is very strict. But we do not want you to forget the existing loopholes which may draw hackers’ attention.
Cashless transactions are preferred nowadays because it ushers convenience and ease. Data loss which may lead to losing access to one’s wallet is another factor to be considered.
Crypto offers no refunds or cancellations on transactions.
The risks involved may stop you from investing in crypto, but let us remind you of the glorious future cryptocurrencies have.
By taking proper precautions you can make your journey through crypto a successful one.
Here is the 3 Advantages and Disadvantages of Cryptocurrency!
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