As technology advances, digital currencies are becoming more used. Cryptocurrency is the most popular digital currency and is worth looking into if you consider using digital currency. These are the pros and cons of cryptocurrency to guide you in an educated decision of whether it’s right for you.
Pros of Cryptocurrency :
Protected from Inflation
Inflation has affected the value of every type of currency in the world. World and national economies determine the value of the currency, which will fluctuate with the economy. Cryptocurrency is protected from inflation because there is only a certain amount released at a time. This limit causes an increase in demand, which will keep preventing inflation in the long run.
Self-Governed and Managed
The governance and management of any currency is a factor in its development. Developers store cryptocurrency transactions on their hardware and, for doing so, get a fee. These developers or data miners keep the transaction records up-to-date, which holds the records decentralized and maintains the cryptocurrency’s integrity.
Secure and Private
Privacy and security are always of concern in our modern world and there is a significant concern for cryptocurrencies. The blockchain ledger used in cryptocurrency is hard to decode and includes complicated math puzzles. This level of difficult security makes a cryptocurrency more secure than other currencies used to complete electronic transactions. They also use pseudonyms unconnected to the user, account, or stored data.
Easy Currency Exchanges
Since cryptocurrency can be bought with many global currencies, it can be traded to other currency types with minimal fees. Converting currency through cryptocurrency is fast and easy.
Decentralized
As mentioned before, cryptocurrency is decentralized, meaning that the developers control the currencies. Decentralization helps keep cryptocurrency monopoly free. It also keeps things in check so no one person can determine the flow and the value of the coin. However, decentralization is a pro and also a con, take a look below.
Quick Fund Transfers
Cryptocurrency transactions, whether international or domestic, are lightning-fast. This is because the verification requires no time to process as there are few barriers to cross.
Cons of Cryptocurrency :
Can Easily be Used for Illegal Transactions
Because of the high level of privacy and security of cryptocurrency, the government cannot track down a user or keep tabs on their data. Cryptocurrency has been used to do many illegal transactions on the dark web. It has also been used to launder money while hiding the source of the funds more efficiently.
Data Losses Result in Financial Losses
Though cryptocurrency is impenetrable and virtually unhackable, and safer than a bank, if the user loses the private key to their wallet, it cannot be recovered. The wallet will remain locked along with the cryptocurrency and financially lost to the user.
Decentralization
Decentralization is a pro and a con. For the same reason, it is good to have it decentralized; a person is still in control of the currency. Since people are corruptible, the holder could manipulate the cryptocurrency for large fluctuations in its price.
Susceptible to Hacks
Although cryptocurrency is highly secure, exchanges are not that secure. Most exchanges store the wallet data of users to process correctly. This data can be stolen by hackers, giving them access to the user’s accounts.
No Refunds or Cancellations
If there is a dispute between concerning parties, or if someone mistakenly sends funds to a wrong wallet address, the cryptocurrency can’t be retrieved or canceled by the sender. The recipient can then use it to cheat the sender out of the money. This can be used by many people to cheat others out of their money.