Cryptocurrency is one of the biggest sensations of current times in the tech world because of its decentralized and safest transaction system. Usually, people get confused while understanding cryptocurrency and blockchain because of their complexities. Actually, both are different things complementary to each other.
Blockchain was invented to circulate cryptocurrency in a secure and organized manner. However, blockchain is also playing significant roles in various other industries like hospitality, education, defense and medical science etc.
In this article, we will only discuss the positive and negative sides of cryptocurrency. Let’s start from the beginning.
A brief introduction to cryptocurrency
The term cryptocurrency is dedicated to virtual money that has no physical existence. Bitcoin was the first cryptocurrency introduced to this world in 2009. Followed by its popularity and drastically rising value, numerous other cryptocurrencies like Ethereum, Litecoin, Stellar and XPR.
As per the fresh report of Investopedia, there are more than 4000 cryptocurrencies are existing as of January 2021 record. Cryptocurrencies are bringing a great revolution in the technology world but also come with some negative aspects. We are going to discuss both pros and cons of cryptocurrency in detail here.
Pros and cons of cryptocurrency
1. Robust cybersecurity
All transactions through the conventional banking system remain prone to cybersecurity threats. Whether it is a digital wallet for banking websites, nothing is 100% safe. Cryptocurrency, on the other hand, requires a blockchain as a digital ledger for transactions. Blockchain technology is the securest option available so far. Blocks of data get stored dynamically in this digital ledger. All the data you enter into the blockchain is secured by 268-bit encryption.
2. Low transaction fee
The transaction fee is one of the biggest issues in conventional modes of payments. Whether is an international or domestic payment, some percentage is deducted from the total amount as a transaction and service charges. The transaction fee is also applicable on cryptocurrency but negligible. The average transaction fee always fluctuates but always remains lower than the fixed percentages of physical money exchanges.
3. Fast processing
Doing business has become convenient with cryptocurrency because of its fast processing. Whether it is Bitcoin, Ethereum or any other crypto money, just a few minutes are enough to reflect balance in the receptor’s account. No matter if you are making a local or international payment, the same time is applicable on all transactions.
Instead of being controlled by a particular bank or money exchange, blockchain is entirely decentralized. Nobody has control over the transactions made through blockchain. However, this digital ledger maintains adequate privacy so that anyone can monitor the transaction flow.
1. Origin is still unknown
On record, Satoshi Nakamoto is named as the founder of blockchain and cryptocurrency but there is no solid proof. Despite a billion-dollar business, its origin is still a mystery.
2. Illegal money circulation
People can make transactions anonymously through this decentralized system. It also has a negative side. Only public-key remains visible to the people connected in the chain of the transaction instead of a person’s real identity. This increases the risk of illegal money circulation for various unethical activities including terrorism and destabilization of a country.
3. High fluctuation in value
The Bitcoin you are buying at $1000 can be $100000 or $100 tomorrow. There is a huge fluctuation in the value which cannot be controlled. Therefore, investment in cryptocurrency is full of risks, especially when more than 4000 different options are available.
Now you can easily evaluate the significance of cryptocurrency in this modern world and the risk factors associated with it. If you utilize cryptocurrency advantages smartly, a lot of great things can happen!