PROS AND CONS OF CRYPTOCURRENCY:
PROS AND CONS OF CRYPTOCURRENCY
Today, virtual assets like cryptocurrency and NFTs are increasingly popular among investors. Beyond this, the decentralized systems on blockchain also allow for secure online payments. A big future where cryptocurrency will significantly disrupt the status quo and reward early adopters is anticipated. Hence, it is a wave all over the world. For example, since the listing of the Bitcoin Fund in the Dubai Nasdaq Exchange in June 2021, the adoption of blockchain technology and cryptocurrency has continued to rise in the Middle East.
However, just as there are two sides to a coin, there are advantages and disadvantages of using this rising technology. We will explore them briefly in the following points.
- Ease of Transactions
With just a smartphone or a PC, coins can be transferred from one digital wallet to another worldwide, anytime, with no restrictions. Little wonder it is coined a global currency. Using the wide range of cryptocurrency wallets and exchanges, one can buy crypto using different currencies such as Dollars, United Arab Emirates dirham, Iraqi dinar, Naira, etc. The verification processes also take little time to process, making transactions easier than Fiat currency transactions.
- Cheap Payment Processing Fees
With cryptocurrency, one can send money across borders, and the transaction fees to be paid by the user are either negligible or nonexistent. This seamless and cheaper mode of payment is because intermediaries like Visa, PayPal, and banks who usually charge for these transfers are cut off in completing these transactions.
Cryptocurrency is largely controlled by the developers utilizing it, the coin owners, or an organization. A government or its central bank cannot regulate crypto. They cannot also freeze or seize it just like fiat currency. This centralization helps to keep the currency monopoly free and immune from government interference or manipulation.
- It is Safe and Secure
One of the notable features of cryptocurrency is that it is secured by cryptography. In addition, since the whole transaction is built on blockchain technology, a decentralized data storage ledger that tracks every transaction underneath, users have a higher level of security and privacy.
It is no news that cryptocurrency thrives on speculation. While cryptocurrency prices can spike to extremely high levels and give nice profits to its investors, it can crash to terrible lows. Unfortunately, these rises and falls are rapid. Cryptocurrency is risky and not a stable or reliable source of return, especially for newbies. Hence, it is crucial to understand the market in-depth before diving in.
- Illegal Transactions.
In cryptocurrency, criminal activities such as tax evasion, money laundering, drug trafficking, and terror financing thrive. This problem is because of the anonymity of its transactions. While all transactions that occur on the blockchain are on the public record and can be reviewed by anyone, the identities of transaction makers remain unknown. Also, there is a dearth of laws and regulations concerning cryptocurrency. The laws are largely vague and not comprehensive where they are available, leading to fraud and scams in the space.
- Susceptibility to CyberAttacks
Even though blockchains are highly secure, the exchanges and wallets can be hacked. Over the years, there have been hacks from cybercriminals. Popular ones are the Mt.Gox, Coinbase and Poly Network hacks. These cyber-attacks have bankrupted some cryptocurrency exchange platforms and the hack deprived several customers of their assets.
- Data Loss
Lastly, because of the tight security and defense protocols, if you lose your private key to your wallet, there’s no getting it back – it is locked away along with the coins. This is unlike physical assets where you can get a new copy of your share certificate or mortgage document if they get lost.
In conclusion, the benefits of cryptocurrency outweigh its disadvantages. Moreover, there is much to gain from investing in virtual coins, especially as many countries open their laws and borders to digital assets as the future of money.