Cryptocurrency is type or form of digital currency which usually operates on its own without the influence of the central bank. It uses encryption technology to do currency units and to ascertain and perform regular operations done by a common currency. Verification of funds being transferred and encryption technology completes the production of many currency units. Bitcoin is the most known; Bitcoin provides trading solutions like the ones performed by a common currency. In general, cryptocurrency has many advantages that its limitations. So let’s look at the pros and cons of cryptocurrency.
It should be noted that at present, these are the perceived pros and cons. Cryptocurrencies are new and while the technology is promising and has huge implications… this can only be a guide and I would encourage you to check multiple sources. As governments become more involved in cryptocurrencies there is a lot of uncertainty surrounding regulation and it’s overall impact.
Also… we are talking about investing here, and while some people consider cryptocurrencies to be the gold rush of the 21st century… you can’t melt crypto into bars and horde them in your closet. In other words… and this is a disclaimer, there is a big risk when investing in bitcoin or any other cryptocurrencies. Do your own research, read opinions on both sides and use multiple sources. Make sure you know what you’re getting into.
Advantages of cryptocurrency
When it comes to bitcoins, the use of open ledger known as blockchain enables transparency as all transactions are recorded and efficiently monitored. Once every transaction is made and completed it immediately recorded on the accounting which can’t be altered by anybody. This brings confidence to the user and the most significant security in the system.
2. Inflation is unlikely
Inflation is usually experienced in the normal currency due to regular changes of prices of goods and services, which makes the national government continually print money. Cryptocurrency like Bitcoins does not experience as much inflation rates due to a minimal number of mineral cryptocurrency. It was designed to only have around 21 million Bitcoins to be mined
3. No restrictions
The normal rules and regulations of the particular country don’t affect the use of cryptocurrency. This is another significant advantage as investors do not need to fear being questioned by the government or regulatory bodies. One does not pay transaction fees or to carry out limited transactions.
4. No ecosystem effects
It is not affected by the social-political environment and financial stability of a country, so investing in cryptocurrency is a good idea as dividends are guaranteed.
5. Consistent growth
There has been exceptional growth with cryptocurrency. The wild highs is not what were talking about when we say consistent growth. The massive highs and lows aside… since crytpo is new, the average of those swings over the long-term are expect to flatten out and grow.
6. Safe for transportation
With have cryptocurrency one doesn’t need to have the box t carry them. You only move billions of dollars in a memory drive and travel safely and conveniently around the world.
The disadvantages of cryptocurrency
1. Can’t be recovered if lost
Unlike the traditional currency in banks that one can successfully be retrieved of lost, cryptocurrency like Bitcoins cant is recovered if lost. No mechanism has been developed touted to help individuals to recover tie lost cryptocurrency.
Many people around the world don’t have basic knowledge of what is all about This makes it difficult to trade with cryptocurrency. Many companies do not accept it as a mode of payment.
3. Increased volatility
Although consistent growth is expected in the long-term, the short-term is almost certain to remain volatile.
4. Potential network stall
The value of cryptocurrency depends on building strong market products that some network users will use. When not they fail, or they don’t get enough users to use the platform, then the currency will reduce the price.
Cryptocurrency such as Bitcoins uses large volumes of energy that proves to be detrimental to the surroundings.
So having gone through the cons and pros of cryptocurrency, you may be wondering if you should invest in cryptocurrency or not? Well, the answer depends on what you intend to achieve. It is not advisable to invest in it if you want to use them as the normal currency. As a long-term investment they can be a good choice (again, with a strong disclaimer to do your research… this is NOT financial advice) but they are certainly not a set it and forget it strategy. There are a lot of changes to come as they integrate with the normal function of markets, and obviously it will depend on which cryptocurrency you back as your winning horse.