Will cryptocurrency last pros and cons

Will Cryptocurrency Last? 5 Pros and Cons About This New Technology

Share this!

Cryptocurrencies and its related technology called Blockchain are a hot topic nowadays. In the beginning(2011) it was just Bitcoin, a new form of digital money, being introduced to the markets. As a result, this digital coin gained a lot of fans among Libertarians and even anarchists. Furthermore, these people just loved the idea of a decentralized currency which has no central authority.

Fast forward today, the total cryptocurrency markets witnessed massive growth(2440 cryptocurrencies!) and this technology is beginning to become mainstream. Will this exciting technology last? In this article will be explained what exactly the pros and cons are.

What is Cryptocurrency

Cryptocurrency can be described as online digital money which has no central authority. It’s decentralized nature removes the need for a third-party which handles transactions. Cryptocurrency coins are secured by cryptographic principles and have limited supply.

Will cryptocurrency last

What solution does Cryptocurrencies offer

Being a young technology also comes with high volatility and daily price swings of more than 15% aren’t an exception. Moreover, this high volatility in the markets, attracts a lot of new Bitcoin traders to the markets looking for quick profits. Trading in cryptocurrencies could be very exciting and markets are open 24 hours a day and 7 days a week. Despite being a ‘money machine’ for risk seeking traders, what actual solution does cryptocurrencies or Bitcoin offer?

Will cryptocurrency last, depends on the actual use case it brings and what solution it has to offer. Moreover, being an online currency isn’t revolutionary also it doesn’t solve any existing problem. This is very true if you are living in the western world but people from Afghanistan, Iran or Venezuela for example, do have problems with their local currencies. As a matter of fact, these people have to suffer from high inflation, bank holidays and are limited to transfer money abroad. Cryptocurrencies and Bitcoin are coming with an alternative for the traditional banking system which could be used on a global scale by anyone in the world.

How governments like China tried to ban Cryptocurrencies before

The survival of cryptocurrencies not only depends by the use of its fans but also it has to deal with all the local governments in the world. Currently banks and governments are in control over fiat-money and decide the supply and demand of it. It’s no secret that these institutions don’t like the rise of this new technology called crypto which invalidates central control over online currencies.

Government interference

PBOC interference into crypto markets

In the early years of Bitcoin back in 2013 it was China who once tried to manipulate the Bitcoin price by banning Bitcoin trading in their jurisdiction. After this announcement a big sell-off happened and the total Bitcoin market lost half of its value in just a matter of days. This intervention of the Peoples Bank of China was the start of a bear-market which lasted more than a year.

Also back in 2017, it was China again who tried to manipulate the cryptocurrency markets. This time the PBOC announced that it wouldn’t allow initial coin offerings(ICO) anymore and as a result it closed all cryptocurrency exchanges in their area. This was a huge blow because China was the epicenter of cryptocurrency trading. Despite this heavy ban from China, the total cryptocurrency markets didn’t care less with Bitcoin reaching a new ATH within a few weeks.

The power of decentralization

Like I explained earlier in this article, cryptocurrencies are decentralized by nature and this property makes it very hard for governments to bring down the entire blockchain network. One can compare the cryptocurrency network with the network of Wikileaks which is also decentralized by nature. A very tough job to bring something like this down!

Will cryptocurrency last and avoid government interference then it has to be decentralized in the first place. Next, I will deep dive more into the pros and cons of cryptocurrencies which gives you more insight whether it’s worthwhile to invest in cryptocurrency.

Good to know
If you are interested in getting to know more about the technology and philosophy behind crypto, I highly recommend to read these books.
Mastering Bitcoin: Programming the Open Blockchain(Amazon)
The Bitcoin Standard (Amazon)

Will cryptocurrency last: The pros

The points in favor of a decentralized currency which can be used on a global scale are many and I will list down the 5 most important benefits.

Will crypto last the benefits

1.Cryptocurrency is transparent

When using cryptocurrency also blockchian technology comes into play. Blockchain technology uses a distributed open ledger on which all transactions are recorded and monitored. Because of this, once a transaction is completed and recorded on the ledger, it cannot be changed. Transactions are available for verification by anyone and anytime. No one person or organization can manipulate it and therein lies [the biggest security feature].

2.Inflation is unlikely

Like I explained earlier in this article fiat-currency especially in third-world countries has to suffer from heavy inflation. As a result savings and pensions are going down the drain. As a matter of fact, all traditional currency experiences inflation because of economies shift prices and governments continue to print more money. Bitcoin and other cryptocurrency do not experience this as much because there is a finite number of minable Bitcoins. It was programmed to have only about 21 million Bitcoins ever to be mined. The last Bitcoin will be mined in 2140 and it will take more than 50 years to mine this one.

3.Portability

Unlike physical money, large amounts of cryptocurrency can be transported easily without detection. It is possible to carry billions of dollars in Bitcoins in a memory drive on your person, though not advisable.

4.People are in control of their money

Since the users of digital currency are in control of their transactions, this helps in keeping it safe. Transactions being made on the Blockchain are trustless which means that it doesn’t matter which party you are dealing with. This protects users from identity theft.

5.Transactions cannot be traced

This is both a pro and a con. The good thing about not being traceable is that there is no fear of any organization monitoring your source of funds. Transactions cannot not be traced back to the source. As a result you are free to buy or sell anything you want.

Will cryptocurrency last: The cons

Besides innovation and decentralization of powers there are also consequences cryptocurrency and Bitcoin has to offer. Next I will list down the possible cons of Blockchain technology.

The cons about crypto

1.Using it is too difficult for ordinary people

Cryptocurrencies are not yet as widely known as they need to be. Currently, not everyone has heard of cryptocurrencies, and even fewer of them understand how it works. Moreover, people tend to be mistrustful according towards digital currency. Also the number of businesses which accept it as a form of payment are few.

This is a limitation to people who want to use crypto for their day to day transactions. Companies are also not to blame, however. Adding cryptocurrency as a form of payment comes with consequences. First, it would require them to educate staff about the concept.

2.Losing crypto is easy and cannot be undone

Unlike banks that have you covered in case of a security issue like a hacking or stolen credit card, Bitcoins are not retrievable if they’re lost. There are currently no mechanisms to recover lost Bitcoins.

According to several people, the best way to store cryptocurrency is on a drive that is not connected to the internet. Also, cryptocurrencies are encrypted for security purposes. The encryption identifies the currency, but not the owner. Whoever has the codes owns the currency and this anonymity feature means stolen coins are lost – that is unless you can steal them back!

3.Transactions cannot be traced

This feature is a pro and a con. Anonymous transactions makes digital currency the perfect tool for criminal transactions. Just like drug dealers and other lousy individuals use cash to avoid detection, transactions made with Bitcoin and others are virtually untraceable. This could be a reason for some governments to declare Bitcoin transactions illegal in their countries.

4.High volatility(for daily use)

When you want to invest in cryptocurrency, keep in mind that while it can be used to buy and sell, it is also a commodity like oil which is subject to changing market prices. When it comes to investing into cryptocurrency, it’s best to consider it as a long-term investment. By doing this, heavy price swings on a daily basis won’t inlfuence you too much.

Disclosure: This post contains affiliate links. This means I may make a small commission if you make a purchase. This doesn’t cost you any more but it does help me to continue publishing cool and actual content about Bitcoin & Crypto – Thank you for your support!

Jelmer Steenhuis

Online entrepreneur at uDigitize
Crypto believer and 'Hodler' of Bitcoin since the early days. Spreading the word about this exciting new technology..
Jelmer Steenhuis

Leave a Reply

Your email address will not be published. Required fields are marked *