Previously, it was mentioned how Cryptocurrency is one of a kind digital currency without likeness. Because not many payments nowadays are without the involvement of a third-party, lower risk payment, little to no fraud cases and most of all, universal in its usage.
However, considering the online nature of Cryptocurrency, there are flaws that come with it. There are 4 major setbacks concerning Cryptocurrency.
The first one is the lack of understanding over Cryptocurrency. In most cases, people are still unaware of the digital currency world and the potential it holds.
This is similar to when the usage of credit card was first announced and the reception towards it is fairly similar to Cryptocurrency. Back then, people wouldn’t even think that paying things using a mere card is possible, what’s more using a whole new digital currency.
Because it is different, and it doesn’t involve cash directly, people shy away from it and constantly doubting its effectiveness. Additionally, it involves online access to make it work.
The idea of having to pay things or transfer money online is convenient to some but most are still skeptical about it.
In order to make Cryptocurrency acceptable around us, the people need to be educated about it to be able to include it in their daily lives.
One way to do it is through networking. But fact is, there are not many places online where people can learn about it.
The effort to learn a whole new world of currency is requires a lot of time and energy. Most would think it is not worth their time because it is not commonly known anyway.
Even though some businesses are accepting bitcoins, the list is significantly small compared to traditional currencies.
This is probably due to the lack of knowledgeable staff that understands the ways of digital currencies. Plus, they need to help educate their customer about it and how to use it for a smooth transaction.
This, again, will take a longer time and effort to teach others. Another drawback of Cryptocurrency would be its lack of protection and guarantee.
In the case of traditional currency, there’s Central Bank who governs the authority on every nation’s money. No higher authority can suddenly decide that they no longer want to use their country’s currency to trade without protest and rejection.
There are proceedings to follow, documents to file, approvals, and many other protocols to follow. However, that is not the case with our digital currency. There is no Central Bank who governs Bitcoin, which means no one can guarantee its minimum valuation.
The value of Bitcoin for example, will fall tremendously should a major group of merchants decided to just ‘discard’ Bitcoins and leave the system. This will inevitably put other users who have invest thousands of dollars into Bitcoins into a major loss. There is no one to contact to file these losses, or rules to help compensate it.
Thus, the decentralised system of Bitcoin is what we call a double-edged sword on its own.
The next disadvantage is its technical shortcomings. When online banking made its way to our life, there’s always a risk of a sudden server failure, power shortage, and even hardware lags.
If it happens and you ended up getting charge but didn’t receive the online movie tickets or flight tickets, you can always call bank service provider, or go to the physical bank instead and declares your case.
Most of the cases if you show evidence of your payment you will get proper compensations or feedbacks.
That is not how it works with Cryptocurrency. First of all, this currency does not have a bank to negotiate and help you around. There is no fixed number that you could call and ask for clarification.
So, if you bought your goods using Bitcoins for example, and the merchant didn’t send the items you purchased, there is nothing you can do to reverse the transaction or refund. You can’t complain it to the police or any relating authority for that matter.
Similar to data corruptions or virus infections, if you hard drive crashes and your wallet file is corrupted your Bitcoin is lost forever. There is nothing you can you do restore it and those ‘coins’ will be ‘orphaned’ in the system.
The last major disadvantage of Cryptocurrency would be because it is still developing.
When things are still developing, it is prone to many risks. There are so many incomplete features that can be improved but it takes longer time to finalize it, especially if it has no physical form.
With traditional currency, despite the method of payments nowadays are done online, and without us actually seeing the physical money transferring from one account to another, in the end of the day, when you reach the ATM, you are capable of holding that cash.
You can use it to buy stuff from the stores physically, and online. That shows how developed our traditional currency is.
Since Cryptocurrency does not have any physical forms, its usage is obviously restricted.
It must always be converted to traditional currency to enjoy its worth. According to studies, there was a time when there is a proposition to store Bitcoin wallet information in cards. However, there is neither consensus nor continuation of the proposal.
Most probable reason would be because merchants find it unfeasible to support all the cryptocurrency cards. There is no system for an immediate payment using the cards, thus users are forced to convert it into real money anyway.
As you can see, there are 4 disadvantages of Cryptocurrencies. There is a lack of understanding towards this digital currency. Plus, there’s minimum protection and guarantee when using is. Because it is mostly operating online, it is bound to experience all kinds of technical flaws and it is still developing.
The world of cryptocurrency is relatively new to some people and it can be difficult to understand. Because nobody really knows what currencies will or can be adopted and at what scale.
Like most things tech, the realm of cryptocurrency can be a bit complex to master and is still new to many. But the advantage of purchasing this currency is surely worth your investment in both time and money. Experts have also predicted that it may be the next big thing in finance.
As a digital asset that serves users online, Cryptocurrency has many appealing benefits. Some of this is thanks to the Blockchain Technology previously mentioned. It is a strictly monitored process with encrypted transaction and control thus, making this online money a thing for the future.
So in this chapter, we will cover the top 4 benefits of Cryptocurrency. The most well-known benefit of this investment is its ‘No Third-Party Involvement’. There’s always a pattern when using traditional money to buy yourself a new property, setting up your own business, or buying a new car. One way or another, the process requires a third-party involvement. We are talking lawyers, owners and some others external factors such as, delays, documentations and extra fees. This in general will consume unnecessary time, money and energy to the point of giving up.
A good example of this scenario would be you buying a new house. You need to pay the Financial Advisor who in general, advises your financial statement to ensure you have a stable income. Some property requires you to pay for a booking fee to ‘lock’ your house of choice and many other add-ons. In short, there’s a lot of third-involvement and it charges you even before you own the property. But that is not the case with Cryptocurrency. As mentioned previously, the blockchain system is similar to a self-rights database. It means, the contract is capable of being design and enforces to remove any involvement of the third-party mentioned before. Moreover, the contract can be customized to complete a certain transaction at a set date at a fraction of any expenses.
Yes, you can eliminate any third-party involvement options, in fact, you don’t even need one. In short, you are in control of your own money using Cryptocurrency. This is what we call the ‘Decentralized’ system, which means there’s no ‘Central or Federal Government’ regulating it for you. Your transaction is practically immune to any influence from your government and its distinct manipulation.
So, it is possible to be able to pay and receive money anywhere in the world at any given time. That transaction is done with minimum processing fees, thus preventing users from having to pay extra charges from banks or any financial institutions.
Next advantage would be the risk it holds is lower than traditional currencies. In this era, most people rarely have their cash in their possession now. Instead, they have an array of credit cards, debit cards and other payment cards available as their nations’ method of payment. Nothing’s wrong with that, except however if the store’s connection to the server is disconnected or their machine is out of service, and you who do not possess any cash just ended up holding the line. The thing about these cards are, any purchase you are making, you are giving the end-receiver access to your full-credit line. No matter how small the amount of the transaction is, the fact that you are giving someone your card to gain access to your account is already a form of ‘breach’. Most of this ‘breach’ is considered secure nowadays using differing safety measures like ‘PIN enabled’ or ‘Pay wave’ methods. Then, the store initiates payment by ‘pulling’ the designated amount from your account using the information provided within your card.
Cryptocurrency doesn’t work that way. Instead of a ‘pulling’ mechanisms, it ‘pushes’ the amount that needed to be pay or receive to other cryptocurrency holder without any further information needed. Payments are possible without your personal information being tied to you the transaction. Your account can be backed up and encrypted to ensure the safety of your money. By allowing users to be in control of their transactions helps keep Bitcoin, Ether or other distinguish Cryptocurrency safe for the network.
Another benefit of using Cryptocurrency would be its protection from fraud. We often heard cases where one’s payment card is being used by other users but not the owner. When contacting his card’s service issuer, it is found that the card has made certain transactions without his consent. This is what we call a fraud case. Most of the time these fraud cases get away with the crime because it is not easy to trace the fraud back to the perpetrator. What’s more it is even difficult to get the attention of law enforcer to launch an investigation with only a single instance of crime the perpetrator commits. However, Cryptocurrency is not viable to fraud act. Because your personal information is kept hidden under unnecessary prying eyes, this protects you against identity theft.
Remember, Cryptocurrency is a form of digital money, created from code. Individual cryptocurrencies are as mentioned, digital, and cannot be counterfeited by senders. Because the transactions cannot be reversed, they do not carry with them any personal information. This ensures security and the merchants are protected from any potential losses that might occur from fraud cases. It is very hard to cheat or making false pose on anyone using these Cryptocurrencies due to its decentralized system and the existing block chain system. It cannot be manipulated by anyone or organization thanks to it being cryptographically secure.
Lastly would be its Universality. Over the course of payment history, nations worldwide have their differing methods of payments implemented. We have money-goods exchange system and even bartering trade. It is not until traders visited other countries that they found out how to trade items to one another. Thanks to various innovations and developments, we now have multiple methods to trade and exchange moneys worldwide. But even with all the upgrades, we are still experiencing problems doing transactions across the globe. There are always currency issues, bank authorizations, unacceptable payment method and some other varying issues experienced by business owners or travelers out there.
Fact is, not all country has similar financial processions. Your card or currency may not be accepted by other countries and that is a major setback to your account. For example, most online banking, payment or cash system requires additional processing fees for their service even if that account is yours.
However, Cryptocurrencies are not bound by any of those exchange rates, transaction charges, the interest rates or any other fees applied on any countries. They can be used at any time at any international standard without experiencing any problems. It also saves a lot of your time and money by reducing additional spending over transferring money from multiple countries to another. Which means cryptocurrency operates at an international platform which in turns, make transaction easier than your average telegraphic transfer.
To recap, there are 4 major advantages concerning Cryptocurrencies. It has ‘No Third-Party Involvement’, ‘Lower Risk compared to Traditional Currencies’, ‘Protection from Fraud’ and ‘Universality’. Despite the amazing advantages that come with Cryptocurrencies, there are also some setbacks to this investment. We will uncover it in the next chapter.
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