Humans are born irrational, and that has made us better decision-makers
To fully understand and get involved in the crypto community, it is essential to achieve a rational view of the benefits and risks of cryptocurrency so that you understand precisely what you may be getting yourself into. Until then, you can decide whether to be in the crypto space or otherwise. Below, we have provided further details on the pros and cons of cryptocurrency.
First and foremost, let’s focus on some of the benefits of cryptocurrency. One of the significant benefits of cryptocurrencies is that they provide easy access for many individuals as incoming and outgoing transactions in digital currency takes about 10 minutes to go through. In addition, transactions that take place in digital currency is at the same speed regardless of where the sender and receiver are located. Compared to other payment forms like banks wire and cheques (or checks), cryptocurrency can settle transactions in as little as a matter of moments. This helps speed up things for people using cryptocurrencies to transact buying and selling.
Besides, the emergence of cryptocurrency has significantly reduced the cost and complexity of financial transactions other than elevating transparency. Since there is no intermediary involved in the digital currency transaction from other third party such as banks or the central bank, transaction fee is relatively low. Resulting in cost saving among users, especially those involved in trading huge amounts.
Some other privilege of cryptocurrencies is that it is beginning to replace other currencies. Much of this is thanks to the fact that cryptocurrency can be sent and spent around the globe, far apart from traditional currencies which tend to be tied to a specific country or region of the world. Unlike fiat currency that needs to be exchanged upon travelling to another country, digital currency comes in handy for users.
Other than that, one of crytocurrency greatest benefits is that it cannot be counterfeited and transactions cannot be reversed or even duplicated. The safety of blockchain transfer is almost 100%. This is due to blockchain technology that only allows transactions to be completed once they are verified, making sure no tampering of data in the system. This is due to everything being recorded in the crypto space, thanks to the blockchain.
There are certainly many great benefits to using cryptocurrency. But going into any kind of investment or purchase without a clear view of the risks involved is not the best idea. You might fall into the trap. You should take a look at the downside of the situation and the potential for the loss before even considering moving ahead into the cryptocurrency realm.
Next, let’s take a look at some of the risks associated with cryptocurrencies. One of the vulnerabilities of digital currencies is their prices are very volatile, meaning that the prices can change rapidly in either direction. In addition, there is always the possibility that the value of a cryptocurrency can become worthless. The fluctuations observed in the past two years are impressive. In a month time, a cryptocoin can go from three to one thousand dollars per coin. You will never know what you are getting tomorrow. As financial experts believe, this volatility is not about to vane anytime soon. In addition to that, since cryptocurrencies are 100% virtual money, investors are highly risked to lose their money in just a flash.
Another risk associated with cryptocurrency is that there is a risk of your coins being hacked. With everything being digitally-based, there is always a possibility that someone could gain access to your crypto funds and steal them. As with what happened to Mt Gox when it went offline and about 850,000 BTC lost from the server in 2014, amounting around $450 million value then. It costs $4.4 billion lost now.
Tip: Make sure that you are using some recommended cryptocurrency wallets to secure your funds.
Besides, there will be an increased number of regulatory intervention in regards of public usage of cryptocurrencies. Government regulation news in recent times seems to create uncertainty and left many with little trust in digital currencies. The China news early of this year has caused massive panic resulting investors to release their shares leading to massive dump in the market.
As you can tell, there are many complex issues to be worked out with cryptocurrency. Many risks will be incurred by those who decide to either invest in the coins or use it in some way or both. This is not to say you should avoid cryptocurrency completely. But we strongly advised you to be aware of all the ways that the decision to purchase these digital coins can backfire you. Only then, having explored all of the different possibilities, should you proceed.