11 Points You Must Consider – The Pros and Cons of Cryptocurrency
Cryptocurrencies have been continuously making news. You hear about it everywhere now, whether it’s through friends, school, or even family members! As a result, more and more people are learning about and looking into being apart of this new revolution. You may even be dealing with the temptation of investing your money in cryptocurrencies! But before you go off and talk about cryptocurrency, be sure to read through this article. By the time you finish, you will have a strong and unbiased understanding of cryptocurrency. This will help you decide not only your understanding but also your position in the cryptocurrency world
Having said, we are more than happy to be apart of this new journey for you in the cryptocurrency world. Whether it’s simply to learn about it or invest in cryptocurrencies, it is important to have a clear understanding of what they are. That’s where you should analyze the pros and cons of cryptocurrencies. This article will help you to get all the information you want to make an informed decision.
Pros of Cryptocurrencies
As the very first thing, let’s take a look at the good things about cryptocurrencies. If you are making plans to invest in cryptocurrencies, you should take a look at these advantages and decide if it’s for you. If you are simply looking to learn, look no further!
1. Cryptocurrencies are Transparent
One of the best things about cryptocurrencies is that they are transparent. That’s because cryptocurrencies are based upon an open ledger. What does that mean? Well first, we call this a Blockchain, so an open ledger is equal to a Blockchain.
So what is a Blockchain? The Blockchain will contain all the cryptocurrency transactions. Once a transaction is completed, the Blockchain entry will update. It is impossible to fake the blockchain transaction. I repeat, there is no possibility for anyone to make alterations to the Blockchain. On the same hand, transactions in the Blockchain is also available for anyone to verify and authenticate the transaction at any given time.
2. Cryptocurrencies are Portable
You can find numerous differences between cryptocurrencies and traditional money (paper money). One of the biggest differences between them is that cryptocurrencies are portable. Okay, you’re thinking, “I can carry money anywhere,” right? Well, if you had a chance, could carry one million dollars? How about one billion dollars in your pocket? Unfortunately, you cannot do that with traditional money. You will need more than a physical wallet to transport your money.
With cryptocurrency, it’s a bit different because your money is now digital! You will be able to carry millions of dollars in a cryptocurrency without being detected but portable, no one can stop you! Thus, you will be able to overcome some of the biggest challenges that you had to face while you were carrying money with you. With a press of a button you can send or receive money from your phone or laptop in what we call a digital wallet.
3. Inflation is Less Likely to Affect Cryptocurrencies
What is inflation? Inflation in the financial world simply means that the money you have is worth less than it was previously. The higher the inflation, the more the value of your money loses. Inflation can affect all traditional currencies. That’s because governments continue to print money when the economies shift prices. Governments have the power to make as much money as they can, unfortunately this can cause inflation.
However, this problem is not applicable to cryptocurrencies. That’s because there is a finite number of coins available in a cryptocurrency. For example, the original creator of Bitcoin, Satoshi Nakamoto, made it impossible to make produce more Bitcoins. There is only a fixed supply of the cryptocurrency and after it has all been released, you cannot make it anymore. Bitcoin was initially programmed to have 21 million Bitcoins. Until the last Bitcoin is mined, additional Bitcoins will not be made available.
4. Absolute Control Over Cryptocurrencies
After you invest in a cryptocurrency and buy the coins, you will have complete control over them. This will help you to ensure the safety of your money as well. All the transactions that take place in the crypto world happen independently. This will help the users of cryptocurrencies to refrain from the negative effects associated with identity theft.
5. Cryptocurrency Transaction Cannot Be Traced to Individuals
Some people can take this as an advantage, but for others, it can be a drawback as well. Since cryptocurrencies are not traceable, no organization or government will be able to keep an eye on the sources of your funds. You will have complete freedom to manage your own money. You will even be able to make money all around the world without being traced.
6. Cryptocurrency is Decentralized
Another unique and important aspect of cryptocurrencies is that they are decentralized. In other words, there is no central authority that can regulate cryptocurrencies. This provides you the chance to make payments across borders without encountering any difficulties. You will have the freedom to use cryptocurrencies and pay for a service in another part of the world without encountering any struggles.
7.Cryptocurrencies Have Lower Transaction Fees
The transaction fees associated with cryptocurrencies are relatively low as well. if you are frustrated with the high transaction fees that you have to pay when you do a financial transaction, you can simply switch to cryptocurrencies. The main reason why transaction fees associated with cryptocurrencies is low because they don’t have any intermediaries.
Cons of Cryptocurrencies
Though we may look at the Pros of Cryptocurrencies, there’s nothing in this world that is perfect! Similar to the benefits, there are some drawbacks associated with cryptocurrencies as well. Here are some of the most prominent drawbacks that you can see.
1. Not All People Understand Cryptocurrencies
Cryptocurrencies still remain a relatively new concept to the world we live in, especially people who do not keep up with the news and innovation. Due to the same reason, not all people can understand the logic and technology behind cryptocurrencies. Some people even tend to mistrust or even fear cryptocurrencies because of this reason.
People have been living with traditional currencies for thousands of years. So it is completely normal and perhaps natural for human beings to fear or be cautious about something that acts as an alternative for the traditional currencies. Even though people who have studied and followed up with the sensation around cryptocurrencies, this still remains a very vague concept for other people groups.
2. You Can’t Recover Cryptocurrencies After You Lose Them
If money is stolen from your credit card, you will be able to open a dispute and get them back. However, this is not something possible to do with cryptocurrencies. When you lose cryptocurrencies, you will not have any method to get them back. Hence, you will have to forget it. That’s because cryptocurrencies are not programmed to be recovered.
3. No transaction Can Be Traced
As mentioned earlier, the lack of traceability associated with cryptocurrencies can be taken as a drawback as well. That’s because people can use cryptocurrencies for illegal activities. For example, it is possible for drug dealers to stick to cryptocurrencies for their transactions. This is the main reason why most governments have not yet legalized the use of cryptocurrencies within the countries, regardless of all the benefits that come along with them.
4. Cryptocurrencies Prices can Experience Volatility or Market Fluctuations
You will be able to use cryptocurrencies as a currency to buy and sell products or services. On the other hand, it is also possible to use cryptocurrencies as a commodity such as oil. Hence, cryptocurrencies can be subjected to changes in market prices. You will need to be mindful of this fact while you are investing your money in cryptocurrencies. In fact, you should take a look at the long term investment. Then you will be able to go for the right investment decisions at all times.
As you can see, cryptocurrencies have both pros and cons. Weighing the advantages and disadvantages of embarking on the cryptocurrency is ultimately your choice. It is up to you to analyze them in detail and make the right decisions on whatever direction you choose to follow. More importantly, one thing we cannot do is ignore the fact that this technological concept or advancement will not cease to be talked about. Perhaps, it may be the innovative piece that revolutionizes this generation.