Cryptocurrency is becoming more and more popular these days, especially to those who are searching for good investment opportunities. However, like other investment options, cryptocurrency has pros and cons that you must be aware of.
Basically, cryptocurrency is a digital currency, which means that it’s all online. You may transfer cryptocurrency to somebody online easily, even without a bank. Some of the well-known cryptocurrencies include Ethereum and Bitcoin. However, no matter how promising cryptocurrency is, before you consider it as one of your online assets, consider the good and not-so-good aspects of this digital currency.
Pros Of Cryptocurrency
- Cheap Transaction Costs
One of the biggest pros of cryptocurrency is its low transaction costs. When compared to other online payment systems that have expensive fees, cryptocurrency won’t cost you much. It means that you don’t have to spend much when transferring money to somebody, and you don’t also need to worry about the added expenses when shopping in some businesses.
- Fast Transactions
Generally, cryptocurrency transactions process faster than checks and other bank-facilitated money transfers. Moreover, every transaction is the final one recorded in the public ledger of cryptocurrency. It means that vendors don’t have to worry about the charge-back fees by dishonest customers.
- You Have Control Over Your Money
If you’re planning to include Bitcoin in estate planning, another benefit you can enjoy is your control over your money. The only way you can access your money is through the use of your private key. It means that there’s no central government, corporation, or bank that could freeze your assets.
One way to insure yourself financially is through having savings in cryptocurrency. For example, if you have issues with your bank account, you’ll still have a backup pool of cash to draw from with cryptocurrency because you’re the only one who can control it.
- Protection From Inflation
Because of inflation, many currencies decline in value over time. On the other hand, although nobody knows what the future holds for cryptocurrencies, one of their advantages is that they have a fixed amount once they’re released. The source code will specify the amount of the coin. Therefore, as the demand continues to increase, the cryptocurrency’s value will also increase and prevent inflation in the long run.
- Private And Secure
Security and privacy have been a primary concern in terms of cryptocurrency. This blockchain ledger is based on various mathematical puzzles that are difficult to decode. It makes the cryptocurrency more secure compared to ordinary online transactions. For better privacy and security, cryptocurrency uses pseudonyms, which aren’t connected to users, stored data, or accounts that might be linked to a certain profile.
Cons Of Cryptocurrency
- Susceptible To Hacks
Even if cryptocurrencies are secure, exchanges aren’t that secure. The majority of exchanges store the wallet data of the users to run their user ID properly. Hackers may steal such data, providing them access to more accounts.
Once they gain access, the hackers can quickly transfer funds from such accounts. Several exchanges have been hacked before, and Bitcoin is one of the cryptocurrencies that have often been stolen in the past few years. Luckily, today’s exchanges are more secure, although they’re still susceptible to hacking.
- No Cancellation Or Refund Policy
If there’s a dispute between some concerning parties or if others send funds to wrong wallet addresses, the coin can’t be retrieved by the senders. This may be used by some individuals to cheat others. Also, since there’s no refund, one may easily be created for transactions whose services and products they never got.
- Lack Of Inherent Value And Price Volatility
Price volatility and lack of inherent value are big problems when it comes to cryptocurrency. This is a crucial concern, especially for those who don’t know much about it. However, the good thing about cryptocurrency is that you can link its value directly to intangible and tangible assets, like energy derivatives and diamonds. Aside from that, increased adoption of cryptocurrency may reduce this volatility and boost consumer confidence.
- Can Be Used For Illegal Transactions
Since the security and privacy of cryptocurrency transactions are high, it can be difficult for the government to track the users just by using their wallet addresses. It’s not also possible even when they keep tabs on the cryptocurrency data.
More often than not, cryptocurrencies, like Bitcoin, are used for exchanging money in many illegal deals in previous years, such as purchasing drugs on the dark web. They’re also used by other people to convert their illegally acquired money via a clean intermediary to hide the source.
While cryptocurrency continues to gain popularity, it might be too early to know how big of an impact this digital currency will have. If you don’t want to take risks, it’s wise to first know more about cryptocurrency, as well as its pros and cons.