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    Advantages and Disadvantages of Using Cryptocurrency

    Article Overview

    A cryptocurrency is a form of digital currency, created and stored electronically. It is not tangible like cash and can be used to purchase goods and services. Cryptocurrencies are decentralized currencies, meaning they are not controlled by a central bank or any other financial institution. Using cryptocurrency has both positive and negative sides. One of the advantages is no middle man. There is no third party that needs to process the transaction. All transactions are peer-to-peer which means you don’t have to worry about paying high transaction fees as there is no fee for the sender or receiver of the funds. And another is faster than traditional banking. Transactions on cryptocurrency networks happen in minutes compared to days with traditional banking networks. On the other hand, one of the disadvantages is the lack of regulation. The lack of regulation has led to scams and frauds in the cryptocurrency platform. Here are some of the pros and cons of using cryptocurrency. 

    Advantages 

    • Low transaction fee

    It takes time and money to send money digitally via a bank gateway. Cryptocurrencies, on the other hand, have low to no transaction costs because the fee charged is minimal.

    • Safety from inflation

    Inflation has caused the value of several currencies to depreciate over time. Almost every cryptocurrency is introduced with a hard and fast amount at the time of its inception. The amount of any coin is specified in an ASCII computer file; there are only 21 million Bitcoins available on the earth. As a result, as demand rises; its value rises as well, which may keep the market stable and, in the long term, prevent inflation.

    • No limitation for transactions

    You may pay or send money to anyone, anywhere, at any time, using cryptocurrencies, regardless of the other user’s location. They must, however, be willing to take payment in the same cryptocurrency. You can make as many transactions as you like because there is no central authority to control or oppose them.

    • Decentralized

    Cryptocurrency is primarily decentralised, which is a huge advantage. Several cryptocurrencies are regulated by the developers who use them, as well as individuals who own a large amount of the coin, or by a firm that is developing it before it is launched into the public. Unlike fiat currencies, which are regulated by the state, decentralisation facilitates keeping the trade of currency free and in check. As a result, nobody organisation can control the flow and hence the value of the coin, which keeps it stable and secure.

    Disadvantages 

    • No proper legal support

    Because bitcoin transactions are so private and secure, it’s difficult for the authorities to track down any person by the wallet address or maintain track of their data. Bitcoin has previously been used as a means of payment in a variety of unlawful transactions, such as buying narcotics on the dark web. Some people have also utilised it to transfer their illegally obtained money through a clean middleman to conceal its source.

    • Cyber Attacks

    Cyber threats are always a threat to anything digital. However, fraudsters pay close attention to cryptocurrencies like Ethereum, Bitcoin, and others, which are in great demand and value. In the event of a cyber-attack and the absence of a regulating agency, recovering lost funds becomes nearly difficult, potentially causing an individual to lose their confidential data as well as their invested wealth.

    • Purchasing NFTs with other cryptocurrencies

    Only one or a few fiat currencies can be used to trade some cryptocurrencies. It compels the user to first change these cryptocurrencies into one of the most popular currencies, such as Bitcoin or Ethereum, and then to their preferred currency via other exchanges. It only applies to a few coins. By doing so, the extra transaction costs are incorporated into the technique, resulting in a waste of money.

    • Highly Volatile

    Currently, cryptocurrency is one of the most unpredictable assets in the global market. However, this volatility and the consequent value fluctuation allow investors to benefit, if the price volatility is negative, it may also compel them to suffer large losses.

    Therefore, if you are looking forward to investing in Bitcoin, you must consider both the pros and cons of it. Then you will be on the right path to make profits.

    Also Read: Top Cryptocurrency Apps in India

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    Daniyel Chatterjee
    Daniyel Chatterjee is a Young Researcher in the field of Data Science & Analytics having research experience of more than 8 years. He has a Masters in Computer Engineering and currently serves as an Editorial Assistant in IGI Global, United States of America. Daniyel also holds honorary positions in the Associate Member of Institute of Research Engineers and Doctors, International Association of Computer Science and Information Technology, International Association of Engineers, Society of Digital Information and Wireless Communications.

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