A survey done by cybersecurity firm Kaspersky showed that 19% of people had purchased cryptocurrency globally. Today we will talk about the advantages, disadvantages, and risks of using cryptocurrencies. So let’s dive in.
Cryptocurrency Advantages
Cryptocurrencies are innovative technology. There are a lot of benefits to using cryptocurrencies. Let’s dig in.
Transfer Globally with Minimal Fee
You can transfer cryptocurrencies all over the world with minimal fees, and you don’t need permissions for large transfers. In November 2019, someone moved 194,993 bitcoins ($1.1 Billion) in a single transaction. And they paid only $700 in the fee.
Read: Common Crypto Questions
Normal crypto transactions can be transferred with negligible transaction fees. With Cryptocurrencies, there are no physical limitations. It travels like any other information on the internet across the globe.
Low-cost Security and Management
Cryptocurrencies can be easily managed without a need to invest in large amounts of money in security. An average person can use hardware wallets to secure their cryptocurrency or manage it using a mobile crypto wallet.
Also Read: Best hardware wallet to secure your bitcoin
You need to secure the device in which you are storing your cryptocurrencies. In addition, there are enterprise-grade low-cost custody solutions available for businesses.
Censorship Resistance and Privacy
In 2011, the USA government ordered all financial service providers to stop providing their service to Wikileaks. Because Wikileaks released something which the government didn’t like, and they got angry ????.
Bitcoin and other cryptocurrencies such as Monero and ZCash are censorship resistance. No one can stop a cryptocurrency transaction.
Read: A Candid Explanation of Bitcoin
Anyone can access all these transactions on the blockchain, but your privacy intact as no one knows which transaction belongs to whom. This also provides a transparent ecosystem where people can analyze things like how much money in circulation.
Note: Companies do chain analysis to figure out the people and entities behind the transaction. But this is not possible with Monero and Zcash. And developers are continuously improving other chains to make them more chain analysis resistance.
No Confiscation
There is no asset class in the world other than cryptocurrencies, which can’t be confiscated by your governments. This is very important for people living under the oppressed regime.
Open Finance
Cryptocurrencies are permissionless. There are a lot of financial innovations applications where you don’t need any KYC or permission to trade, borrow, lend, or use other financial services. It is called DeFi, decentralized finance.
Read: A Beginner’s Guide to DeFi (Decentralized Finance)
Cryptocurrency Disadvantages
There are some disadvantages of using cryptocurrencies; let’s dive in
Education
It’s been more than ten years since Satoshi Nakamoto introduced Bitcoin to the world. But still, a lot of educational gaps when it comes to people’s understanding of cryptocurrencies.
As mentioned above, a whopping 19% have purchased cryptocurrencies globally but only 10% percent of them understand how cryptocurrency works?
Read: Bitcoin for Beginners (Common Questions)
Crypto technology is changing fast, and innovation is happening all the time. In addition, without proper education, there is always a risk of people losing their cryptocurrencies.
Education is the key to adoption because cryptocurrencies have better fundamentals, and we need to do a lot of work in this front.
Regulations
Some governments have banned cryptocurrencies in their countries. This is bad for adoption and scares away people. In addition, unclear regulations are also not helpful for people who want to involve in cryptocurrencies or start a business in this domain.
Risk of Cryptocurrencies
Let us also learn the risk involved when dealing with cryptocurrencies.
Technology Failure
Though technology has been around from the ten years, it still new when we are talking about putting trillions of dollars on it. There have been hiccups in the past, such as Dao hack, with more than $50 million in the loss.
In any case, softwares will always have bugs, and people will try to find and exploit these bugs. However, as technology will improve, these risks will be eliminated.
Value Loss
Cryptocurrencies are highly volatile; investing in crypto involves financial risk. So first, learn about the cryptocurrencies and invest the amount that you can afford.
Wrapping Up…
We think education will mitigate many risks and disadvantages mentioned above, and better global regulation will increase the adoption.
With all the risks and disadvantages, cryptocurrencies are innovating technology, which will domite the future of money.
If you use cryptocurrencies, let us know what you think about the advantages, disadvantages, and risks of crypto in the comment section.
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