Cryptocurrencies are slowly setting a foot in the finance market and have started gaining traction around the world, to the extent that, a few Asian countries which used to hold a negative stance regarding cryptocurrencies, have started to consider the same with a bit optimistic approach. In this case, the credit goes to the benefits which these digital currencies bring on the table. However, what we are discussing today is the less talked about aspect of cryptos: the cons of cryptos.
While every coin has two sides, a large part of the crypto-community has focussed on the positive side of this newly arrived technology most of the time. It is crucial to know what disadvantages cryptocurrencies hold, how they can be tackled and what benefits they can bring in. Major drawbacks of the digital currencies include:
The constantly fluctuating prices of cryptos have infused the instability in the market and therefore, making it a risky affair. Such volatile nature of the market keeps the investors in angst and worried regarding his returns. This level of volatility, which is largely due to a lack of inherent value, paints the existence of cryptocurrencies as a bubble.
Despite the rapid spread of digital currencies in daily use, there is a significant amount of hesitation regarding its use as a payment mode. The risk that the method of crypto payment poses has played its role along with the lack of awareness here. Also, the escalating numbers of fraud and theft incidents have caused people to look at cryptos with a bit of skepticism.
Vulnerability to Terror Funding and Money Laundering:
Cryptocurrencies being decentralized, appear difficult to regulate. Due to that, several criminal activities find their way easily to disrupt the ethos within crypto space. The anonymity factor in crypto-space seems to be a major reason behind it. However, anonymity, at times comes across as a protection layer against hacking.
Moreover, the way the crypto market depends upon ‘Bitcoin whales’ also emerges as a threat to the rest of the investors, as this ‘whales’ can turn the tide at any point in time for the market.