Advantages and disadvantages of cryptocurrencies
The number of cryptocurrencies is growing every day. There are great differences between the cryptocurrencies now available. Some can be a good form of investment, some are better for transactions, some can be used as a store of value and some are plain scam projects.
Advantages of cryptocurrencies
Blockchain technology – ensuring the complete security of your assets. Each block in a blockchain is linked to those before and after it, and records are secured by cryptography.
Low transaction fees in comparison with standard bank transfers, specially with higher amounts and international transfers
Irreversible transactions – if you make any transaction, you can no longer undo it, reducing the risk of fraud
Limited supply – most cryptocurrencies, including Bitcoin, have a fixed maximum coin supply. There are 21 million bitcoins in total
Single global currency – without transfers and exchange fees, worldwide
Increased stability – cryptocurrencies can serve as reserve currencies in countries that are unable to cope with inflation
Not subject to inflation – on the contrary, it is deflationary in nature
No central authority – not subject to government or bank control
No currency counterfeiting – ensured by decentralization. All transactions are under network control
Disadvantages of cryptocurrencies
Volatility – major cryptocurrencies are known for their high volatility as they are treated as investments rather than as means of payment.
The need for an internet connection
Scepticism – some people hesitate to use cryptocurrencies simply because they are not regulated or guaranteed by national governments
Frauds and hacks – a significant influx scam projects and hacks has undermined the confidence of many people
Loss of password or private key means loosing your funds for good
Although cryptocurrencies do not have such a long history compared to traditional means of payment, they have been booming recently. Yet many people are reluctant to recognize their value over other payment systems, such as bank transfers, fiat, e-wallets or PayPal. However, in many countries around the world, significant steps have already been taken to legalize cryptocurrencies, and their transactions are recognized as the official payment method.