Cryptocurrency has caused a lot of buzz in the digital world. You may have heard a lot of people discussing this currency and want to invest in it.
But, you may not know what it is. Or, you may be unsure of how to invest in it. So, to help you, we are going to discuss a few pros and cons of cryptocurrency in this article.
This discussion will help you a lot in making an educated decision about cryptocurrency.
What is Cryptocurrency?
It is a digital or virtual currency. They are bank-independent and use a decentralized technology to send or verify transactions.
They used a virtual wallet for sending and receiving money. There is no third party involved in transferring cryptocurrency. Their decentralized structure is widespread across a large number of computers. This also ensures that the government or any valid authority is not involved in this system.
The heart of the cryptocurrency system is blockchain technology. It is a set of connected blocks of information on an online ledger.
A block contains a few transactions. These transactions are verified independently by each validator.
Bitcoin and Ethereum are two popular cryptocurrencies. After the launch of Bitcoin in 2009, almost 21,000 different cryptocurrencies have been created.
These have their advantages and disadvantages. So, let’s discuss what these are.
Advantages of Cryptocurrency
1. Lower Transaction Fees
The cryptocurrency doesn’t involve any third party. There is no PayPal or any other company in this system. So it makes transaction fees nominal to zero.
Moreover, the cross-border transaction process of cryptocurrency doesn’t have challenging foreign transaction issues. So, it makes transactions easy and affordable.
2. Secure system
The infrastructure of cryptocurrency is secured. The decentralized data storage ledger can track every transaction. Once a transaction is stored in it, you can’t erase it.
Moreover, this system is stored in various computers. So, if a hacker wants to hack the blockchain, they can’t do it.
This system is not only secured from hackers but from a monopoly of money too. No government is involved in it so its value is not dictated by any government or bank.
3. Available for 24/7
The best thing about cryptocurrency is it is always open. Coins are mined and transactions are recorded every hour so you don’t need to wait for working hours to start the project.
This is a huge benefit over the normal stock exchange policy.
4. Helps in Beating Inflation
The national inflation has no impact on the cryptocurrency. The single money and economy don’t impact the price of cryptocurrency in any way.
This system depends on global demand rather than on inflation. Moreover, this system has ensured the minting of a specific number of coins at one time.
This technique helps protect against inflation.
Disadvantages of Cryptocurrency
1. Hard to Understand
Cryptocurrency is really hard to understand. You need to invest a lot of your time and energy in understanding this currency.
It will be especially hard for those who don’t know anything about the digital world. But if you are a tech expert, you may understand cryptocurrency.
But still, you need to invest a lot of time and energy in understanding every aspect of this technology.
2. Risk Investment
The investment in cryptocurrency doesn’t lead to stable results. It is risky because the prices of bitcoin can fluctuate greatly.
This fluctuation can give you huge profits now and then. It can increase your value and make a wise choice.
But it can lead to losses too. Because, the price of bitcoin can dip suddenly, causing a loss to specific investors.
3. Security Issues
You can face various security issues too while investing in cryptocurrency. Though they have made their system secure, hackers and crypto criminals can find their way into it.
Hackers use it for ransomware activities. Different criminals use cryptocurrency for money laundering and illicit purchases.
Also, a bitcoin transaction is irreversible. So, if your funds are stolen, it is difficult to recover them.
4. Uncertainty about It
Cryptocurrency hasn’t proven itself as a long-term investment. There are a lot of uncertainties related to its longevity and quality of investment.
It has been in the world for over a decade. In 2008, it was introduced. But, the stock market has a history of centuries.
So, you should be brave enough to invest money in this digital asset.
Conclusion
In short, cryptocurrency is a valuable online asset that has various positive and negative points. Your experience of investing in them can be either amazing or awful.
So, you should keep the negative aspects of it in your mind while investing in the cryptocurrency.
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