Cryptocurrency: An Angel or a Devil in Disguise?

Needless to say, cryptocurrencies are one of those topics that have successfully caught our attention in recent years. While some consider it the beginning of a new era, others have called it dangerous and unsafe. Regardless of all opinions, there are 68 million cryptocurrency users worldwide. The first decentralized virtual currency was created back in 2009 and became known as Bitcoin. It's basically tamper-proof. The first Bitcoin purchase in the world in 2010 was for 2 pizzas that cost the customer 10,000 BTC. However, as of today, there are more than 18.6 million Bitcoins available on the market. Wondering if cryptocurrencies are an angel or a devil in disguise? We've got you covered. Read the article to know more.

What is cryptocurrency?

In the simplest language, cryptocurrency can be defined as a form of virtual or rather digital currency, decentralized or global in nature. It is protected with the help of cryptography, which makes it impossible to forge. What makes cryptocurrencies stand out from the crowd is the fact that they are essentially decentralized. In other words, no central authority, government or organization can take control of the system, making it immune to any form of manipulation. It is protected by what is known as cryptography and keeps the user's assets safe.

Advantages of using cryptocurrencies

The decentralization of cryptocurrencies makes them worth investing in. There are plenty

#1 Investing in cryptocurrencies will save you time and money!

Unlike cash transactions or even online money transactions that take days to complete, cryptocurrencies take minutes to send or receive. On average, it takes less than 10 minutes to verify whether a bitcoin transaction is legitimate or not. Currency conversion while traveling can be quite expensive. Cryptocurrencies, on the other hand, are global and can be sent anywhere in the world. Plus, they are not expensive at all. For example, you can buy a tether coin (USDT) for less than $1.

#2 Cryptocurrency is decentralized and can hardly be stolen!

A major benefit of investing in cryptocurrencies is that these currencies cannot be confiscated by the government or stolen because there is no centralized institution that stores or distributes cryptocurrencies. This makes an investment in Cryptocurrencies relatively safer.

#3 Cryptocurrency is protected in the hands of the owner!

Unlike other forms of transactions, cryptocurrencies do not collect or reveal personal or sensitive data. Transactions are mostly anonymous and any type of identity theft is impossible. In 2020, according to the security magazine, the cryptocurrency theft rate had dropped by 60% compared to losses of $4.5 billion in 2019.

#4 The transactional speed is remarkable

For most wire transfers from financial institutions, it takes at least three to five days to complete a transaction. Therefore, if you are planning to send money to your near and dear ones, there are only a few options to transfer funds or assets from one account to another quickly enough. This is where cryptocurrency transactions come to the rescue: they are completed in a matter of a couple of minutes.

Disadvantages of using cryptocurrencies

Like anything else in the world, cryptocurrencies also have their disadvantages. Let's take a look at what they are:

#1 The price of different cryptocurrencies is highly volatile!

Perhaps the most significant disadvantage of investing in cryptocurrencies is the rate at which prices continue to fluctuate every day. A crypto crash can happen at any time. In the year 2018, Crypto-crash caused a loss of $14.2 billion for investors. This is one of the main reasons why investors stay away from Cryptocurrencies.

#2 Risk of data loss

Cryptocurrency designers had planned to create an impenetrable authentication process as well as virtually undetectable ASCII documents, along with strong anti-hacking defenses. They believed that placing money in cryptocurrencies and not real cash or bank vaults would make it much safer. However, if someone loses or forgets their wallet's private key, there is no other way to recover it and this is one of the main disadvantages of cryptocurrencies.

#3 Lack of regulations can also be counterproductive!

On the one hand, the lack of a centralized system has its own benefits. On the other hand, however, there are possibilities of scams and frauds with no one to turn to in case of loss. There is no central authority that manages transactions and therefore, decentralized currency can become a nightmare for investors. According to a recent survey, 20% of the bitcoins people invested in were lost and could never be recovered due to lack of centralization and no one to report to.

#4 It's hard to understand cryptocurrencies!

The very concept of a cryptographically secured digital currency that can be used globally without any centralization is likely to baffle commoners who understand nothing about economics. In The Ascent survey that was conducted in May 2021 and included 2,000 US adults, it was found that almost 20% of them do not understand how cryptocurrencies work. This can be a barrier for some people.

#5 No refund or cancellation option

For those of us who use online transactions, we rely heavily on refunds and cancellations. Cryptocurrency cannot be returned to a sender in case there is a disagreement between the two parties involved. Therefore, people could use it to defraud others.

Investing in cryptocurrencies: is it worth it?

Cryptocurrencies have become an integral part of our digital lives. Technological advancement in the 21st century has its own advantages and one of them is the emergence of cryptocurrencies. In a survey conducted in 2021 of more than 60,000 people around the world, around 97% of them declared their faith in the cryptocurrency market. While some are still struggling to know more about it, others have already started investing in cryptocurrencies. Like any other investment, this one also has its pros and cons. Therefore, like any other investment, you should carefully check all factors, such as safety and security, that may affect your investment.

Conclusion

People have been investing in cryptocurrencies for quite some years. So if you have extra money on hand, investing it in cryptocurrencies doesn't seem like a bad option. Despite all the advantages, cryptocurrencies have a number of disadvantages that are difficult to overlook. Therefore, it is advisable to refrain from investing in cryptocurrencies for the time being.