Cryptocurrency-Advantages and Disadvantages

Crypto is a digital currency. It is not governed by any bank or central authority agency. Many Cryptocurrencies are based on blockchain technology which is distributed ledger. Cryptocurrency uses cryptography techniques to secure digital transactions. 

In cryptocurrency, a unit has created through a mining process. Users can also buy a cryptocurrency from a broker. Cryptocurrency is an intangible asset.

Example of Cryptocurrency:

•             Bitcoin

•             Ethereum

•             Avalanche

•             USD Coin

•             Binance Coin

•             Ripple

•             Terra

•             Cardano

•             Shiba Inu

•             Dogecoin

•             Litecoin

•             Solana

Legitimate:

As of December 202, El Salvador was the only country in the world to allow Bitcoin as legal tender for monetary transactions. For the rest of the world, cryptocurrency regulation varies by jurisdiction.

In Japan and EU, Cryptocurrency is legal. China has banned cryptocurrency. In India, Cryptocurrency is not legal as of now.   

 Advantages of Cryptocurrency:

1. Main advantages of cryptocurrencies are that it is decentralized currency so it can be more convenient and faster as compared to traditional banking system. It eliminates large dependency on bank and failure of banking system.

2.  Loans can be processed without banking collateral, can be executed within seconds.

3.   Cryptocurrency transaction is relatively low as compared to other financial services.

4.  The process of setting up a cryptocurrency wallet is extremely fast as compared to opening     an account in traditional financial institutions.

5.  Cryptocurrency is secured by Private Key and blockchain technology.

6.   With inflation many currencies value declined with time while cryptocurrency launch with a fixed amount. As demand increases the value of cryptocurrency increases which in long term prevent inflation.

Disadvantages of Cryptocurrency:

1)  Since cryptocurrency transaction are highly secured it is hard for the government to track down any user. Also cryptocurrency is a decentralized form of currency it can be used for many illegal transaction.

2)  Cryptocurrency are put in wallet. If any user loses the private key to their wallet, there is no way to getting it back.

3)     In cryptocurrency, a unit has created through a mining process which require a lot of computational power and electricity input making it highly energy intensive. Major Bitcoin miners are in countries like China that use coal to produce electricity. This has increased China’s carbon footprint tremendously.

4)    Cryptocurrency has no refund or   cancellation policy.

5)    Cryptocurrencies is an extremely volatile investment. 

6)   Cryptocurrency has failed to prove themselves  as a long term investment.

Cryptocurrency as a Long Term Investment:

Many cryptocurrency are launched with a very impressive objective which may be achieved by a long term horizons.  Early investor in a cryptocurrency that reaches its goal can be richly rewarded over a long time.

Bitcoin is the most popular and widely known cryptocurrency Bitcoin can also be considered as digital gold by many investors. Bitcoin supply is fixed so many of its investors believes that its value will increase over a long term.

Many of its investor believes that Bitcoin has all the potential to become the first truly global currency.

 

 Should you Invest in Cryptocurrency?

If you believe that cryptocurrency usage will become increasingly widespread over time, then it makes sense for you to buy some cryptocurrency directly as part of diversified portfolio.