Cryptocurrency May Not Be A Good Fit For You
Cryptocurrency, unlike other currencies, is digital money. It’s constructed in such a way that you can more securely transfer your payment while protecting the identity of the sender. It was created around 2009. This currency is specially designed for internet users to make purchases and transfers easily. A question that is often asked but everyone, why would you use that currency? Because transactions made in crypto can’t be faked or reversed and it costs low fees as compared to other currencies. They possess a decentralized nature, which means they are available to everyone. But everything has its drawbacks despite its advantages. Here are a few reasons why crypto may not be suitable for your business.
Despite all the advantages, yet the cryptocurrency has a significant drawback of uncertainty. The reason behind its weakness is digital tokens are in continuous motion, and their numbers are increasing rapidly. Moreover, the transaction is another factor. The speed through which purchases are made can not be compared with VISA and other Master Cards. The nature of the currency is volatile, i.e. the value of digital tokens are continuously changing, making it difficult for the investors to invest their money.
Traditional Elements Are Not Available
Like other currencies, you can conveniently hold the organization’s financial records, thus letting the customers get a clearer picture of the success of the business. But in crypto, there are no such elements. With the speed of transferring money and day to day transactions, it is difficult for investors to analyze the cryptocurrencies.
Might Be Buying The Wrong Asset
Hence traditional elements are not there in cryptocurrency there are many chances that the asset you are buying may not have long term value. It is not like an in-hand asset, and everything is virtual. Even those who are linked with blockchain don’t give any kind of ownership to the investors. It’s value increases and decreases continuously, and it is less likely to be stable, so there are chances that the asset you are buying might lose it’s value the very next second.
No doubt cryptocurrency has a future, but still, it lacks confidence. For many businesses, cryptocurrency is like a puzzle which is yet to be solved. The primary reason behind it is that it is untested. Due to this unwillingness of businesses to implement cryptocurrency typically indicates blockchain as a unique technology for many years to come.
Emotional Investor influences trading
With less knowledge of cryptocurrency and due to its less stability, sometimes you buy an asset that loses its value. You get disheartened. As a result, you try to invest your money at other things which further costs you. With the intention of less profit, you try to get rid of those digital tokens. In short, cryptocurrency’s instability affects emotional investors the most. And they would likely take further worst steps to overcome their loss.
Hands Are Tied
In actual-world currencies, you have got a financial statement as proof, but in bitcoin, the whole transaction is made anonymously. So SEC ( Security Exchange Commission) has announced that in case of fraud, their hands are tied as the purchase is made anonymously, they can’t recover it.
As it is a digital currency, unlike real money, you can’t store it in your wallet. For storage, you need digital wallets. But if a user forgets his username and password, it is impossible to recover it, due to strict encrypted integration of blockchain. Even the SEC (Security Exchange Commission) can not help you to improve your money. One must think 1000 times before storing his money in a digital wallet.
Lag In Security
Although bitcoin is considered the most secured method of investing and transferring. Yet theft does occur now and again. According to a source between 2011 and 2014, hackers stole 70% trading bitcoin from Mt. Gox. Around 850,000 stolen bitcoins worth more than 7 Billion Dollars.
Taxes Are Night Terrors
Even in a reasonable world, charges are usually nightmares for us, but in crypto, the situation is even worse. Digital currency investors can no longer enjoy a tax-free life.
Little Understanding Of How It Works
Despite its popularity cryptocurrency is not common in people; they have little understanding of digital currency and how it works. Most businesses avoid it because it’s untested. According to a source in the USA, almost 50% of people are familiar with bitcoin, but out of every five people, 4 of them don’t know where and how to buy digital tokens.
Cryptocurrency Is Only For Dear Ones
No doubt a few of the people only know actually how cryptocurrency works and where to buy tokens. Some countries like Pakistan, South Korea, The CIS countries, have not allowed the use of cryptocurrency, because of this reason purchase and selling of digital tokens are still uncertain in these premises. Even on the internet, very few countries have allowed the use of cryptocurrency. Yet in countries with transparent and efficient policies, there are some barriers while we talk about purchasing and selling of (cryptocurrency) digital tokens. This thing leads us to the conclusion that cryptocurrency is only available to those countries and areas where people interact with technologies and do their duties in this area.
Due to its high-security system and immunity to being hacked, it is easy to make illegal transactions through cryptocurrency. It’s difficult for the government to track down any record. One can easily buy drugs on the dark web and convert their fraud through a mediator into a clean source.
Even though the cryptocurrency is decentralized but still some of the currencies are managed by some organizations and the creators of money. They can easily manipulate the value of currency whenever they want. An example of their manipulation can be seen in 2017 when the amount of bitcoin was doubled.
Availability Of Some Coins In Other Currencies
Some currencies can only be in a few other currencies. This pushes the user to convert their currencies like Bitcoin or Ethereum. This conversion causes some fees resulting in the overall increase in the costs of processing.
High Energy Use
Dealing in cryptocurrencies requires much energy, especially bitcoin. It does not work on an ordinary computer. You can find the majority of the bitcoin miners in China. They use coal to produce electricity. Due to this, the consumption of fuel in China has increased tremendously.
Concluding all of the points as mentioned earlier, it is indicated that instability of the digital tokens might cause you to buy a wrong asset (having no long term value), in case you are an emotional investor you would further take wrong steps. Due to its high security, it is difficult to hack the system, but once cut, or the user has forgotten his password, it can not be recovered even SEC can’t help you. Before going into the cryptocurrency business, make sure you have a detailed knowledge of how it works, and it is not banned in your country.