The idea of ‘cryptocurrency’ has been floating around since 1998. B-Money and Bit Gold were the first known attempts to develop a digital cryptocurrency.
But unfortunately, both were not successful in the market. And the idea of cryptocurrency got spread in an unprecedented manner, which resulted in the birth of cryptocurrencies known as Bitcoin, Ether, etc.
Arguments regarding these cryptocurrencies
The valuation of Bitcoin hit the ceiling in recent years. This unprecedented surge (especially for Bitcoin) has created an uproar and caught the attention of authorities. This got the currencies under the scanner of these authorities.
The authorities opined that illegal and anti-social events or elements might thrive due to the digital currency surge. There have been incidents lately where malware attackers have demanded ransom in the forms of Bitcoin.
In contrast to these arguments, technocrats are highly in favor of cryptocurrencies. These currencies work in a decentralized format which makes them very secure and nearly non-hackable.
Also, there is no control of any regulatory body or financial institutions over cryptocurrencies yet.
Even there are people in Ireland who take loans to invest in cryptocurrency. Hence cryptocurrencies as new age economy are visioned by these technocrats.
Let us consider both the arguments and take a brief look at the various advantages and disadvantages of these cryptocurrencies for you.
Advantages of Cryptocurrencies
Faster Transaction Speed
As compared to any of the banking transactions, superior and faster transactions are possible with cryptocurrencies.
While Bitcoin takes about a few minutes to validate a transaction, Ethereum takes about a few seconds for the same transaction.
Cryptocurrency transactions are totally anonymous. It is nearly impossible to identify who has initiated or done the transaction or with whom it has been made. Only the network address of the sender and receiver are used for the transactions.
Personal information of the corresponding participants is not stored or published in the ledger hence the anonymity.
One of the most noticeable advantages of cryptocurrency is that there isn’t any restriction on the number of transactions.
Users can send or receive currency any time and from anywhere to everywhere. No server downs or holidays like with banks, or no limitation on the within-country transactions. *
Less /No transaction fees
The cryptocurrency transactions are either free or nominally charged, which is much lesser than charges levied by any of the present financial institutions.
There are options to offer transaction fees to speed up the transaction. The user providing a transaction fee attracts more miners to validate the transaction, and hence the faster the transaction gets validated.
Immutable means that if one transaction regarding the cryptocurrency had occurred in the blockchain, it becomes irreversible. Hence once the transaction is done, the chances of fraud go down to nearly impossible to execute.
Cryptocurrency cannot be De-monetize
Cryptocurrencies work on the principle of a decentralized ledger system. The demand-supply factors decide the exchange rate dynamically for currencies.
Hence the involvement of the government or any regulation cannot stop or influence the independence of cryptocurrencies. Government can only restrict the conversion of cryptocurrency to a regular currency of the country.
But even then, the transactions executed via cryptocurrencies cannot be stopped or restricted.
Secure Payment information
Cryptocurrency transactions don’t involve or use the identities of the users. Only the web wallet address of sender and receiver is used for the transactions, while all other information remains securely stashed, and nobody can retrieve it.
When anyone sends the currency to another person/entity, personal information doesn’t get shared, and the designated amount of currency will get transferred to the other account.
Mostly the cryptocurrencies are limited in terms of coins that are being generated (minted), which means the limited currencies in the respective exchequer.
Once the total numbers of possible coins are mined, newer coins cannot be generated. Hence no inflation is possible.
Disadvantages of Cryptocurrencies
Lack of knowledge
With the sudden surge, many non-authentic currencies have emerged in the market. People lack knowledge about the new technology and the multiple currencies unearthing every month.
Hence, investing without proper background knowledge about the companies or coins makes you prone to losing your money to something you haven’t learned about.
Better is to understand the technology, its complexity, and working, and then research the right coin or currency to invest your money into.
Lesser Acceptance in the Market
Cryptocurrency demand is surging continuously, but many governments have not officially approved the use of cryptocurrency transactions.
Because of which the usage of currency is limited and confined to specific domains or applications. In addition to that, it is still far from the common people and is limited to a select section of people.
A strict demand-supply rule is used to define the exchange rate. But the present market scenario indicated the uncommon trends and increased or hyped exchange rates of these cryptocurrencies.
Though it is believed that sooner or later, this hype will settle down, and hence the exchange rates will normalize.
Government can Ban
Government cannot control or regulate cryptocurrencies, but they definitely can ban or illegalize the transactions. Banning or illegalizing impacts the acceptance and usage of currency, but the whole idea of cryptocurrencies cannot be stopped.
People in Ireland have taken personal loans for bad credit but fail to repay as their savings are stuck with cryptocurrency.
If you have done a transaction by mistake, you cannot get that back or reverse it. Once the currency coins have been transferred, it is statutory, and you cannot roll back the transaction in any which way.
Key recovery is impossible
Most of the cryptocurrencies do not have any central authority to regulate. Hence the individuals are responsible for keeping their accounts safe and private.
In case if you have lost your wallet key or address, no one can really help you to retrieve it. There is no authority you can approach and get it resolved. You will simply lose your coins.
Supports Money Laundering
The absolute anonymity of using cryptocurrencies also makes it possible to launder the money and an option for black marketers.
Because the identity is not revealed, cases of misuses such as cyber-attacks or ransom demands in the form of bitcoins have been reported.
Cryptocurrency has its own unique features that attract both arguments in favor and against. Despite all that, you cannot defy or ignore the gaining popularity of cryptocurrencies and their applications in different domains.
Despite the challenges, it is being seen as the future or parallel economy and worth exploring.