ADVANTAGES AND DISADVANTAGES OF

CRYPTOCURRENCY

Advantages of Cryptocurrency :
1. Protection from inflation –
Inflation has caused many currencies to get their value declined with time.
Almost every cryptocurrency, at the time of its launch, is released with a fixed
amount. The source code specifies the amount of any coin; like, there are only
21 million Bitcoins released in the world. So, as the demand increases, its value
will increase which will keep up with the market and, in the long run, prevent
inflation.
2. Self-governed and managed –
Governance and maintenance of any currency is a major factor for its
development. The cryptocurrency transactions are stored by developers/miners
on their hardware, and they get the transaction fee as a reward for doing so.
Since the miners are getting paid for it, they keep transaction records accurate
and up-to-date, keeping the integrity of the cryptocurrency and the records
decentralized.
3. Secure and private –
Privacy and security have always been a major concern for cryptocurrencies. The
blockchain ledger is based on different mathematical puzzles, which are hard to
decode. This makes a cryptocurrency more secure than ordinary electronic
transactions. Cryptocurrencies, for better security and privacy, use pseudonyms that
are unconnected to any user, account or stored data that could be linked to a profile.
4. Currency exchanges can be done easily –
Cryptocurrency can be bought using many currencies like the US dollar, European
euro, British pound, Indian rupee or Japanese yen. With the help of different
cryptocurrency wallets and exchanges, one currency can be converted into the other
by trading in cryptocurrency, across different wallets, and with minimal transaction
fees.
5. Decentralized –
A major pro of cryptocurrency is that they are mainly decentralized. A lot of
cryptocurrencies are controlled by the developers using it and the people who have a
 significant amount of the coin, or by an organization to develop it before it is
released into the market. The decentralization helps keep the currency monopoly
free and in check so that no one organization can determine the flow and the value
of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies
which are controlled by the government.
6. Cost-effective mode of transaction –
One of the major uses of cryptocurrencies is to send money across borders. With the
help of cryptocurrency, the transaction fees paid by a user is reduced to a negligible
or zero amount. It does so by eliminating the need for third parties, like VISA or
PayPal, to verify a transaction. This removes the need to pay any extra transaction
fees.
7. A fast way to transfer funds –
Cryptocurrencies have always kept itself as an optimal solution for transactions.
Transactions, whether international or domestic in cryptocurrencies, are lightning-
fast. This is because the verification requires very little time to process as there are
very few barriers to cross.

Disadvantages of Cryptocurrency :
1. Can be used for illegal transactions –
Since the privacy and security of cryptocurrency transactions are high, it’s
hard for the government to track down any user by their wallet address or
keep tabs on their data. Bitcoin has been used as a mode of exchanging
money in a lot of illegal deals in the past, such as buying drugs on the dark
web. Cryptocurrencies are also used by some to convert their illicitly
obtained money through a clean intermediary, to hide its source.
2. Data losses can cause financial losses –
The developers wanted to create virtually untraceable source code, strong
hacking defenses, and impenetrable authentication protocols.
8. This would make it safer to put money in cryptocurrencies than physical cash or
bank vaults. But if any user loses the private key to their wallet, there’s no getting it
back. The wallet will remain locked away along with the number of coins inside it.
This will result in the financial loss of the user.
9. Decentralized but still operated by some organization –
The cryptocurrencies are known for its feature of being decentralized. But, the flow
and amount of some currencies in the market are still controlled by their creators
and some organizations. These holders can manipulate the coin for large swings in
its price. Even hugely traded coins are susceptible to these manipulations like
Bitcoin, whose value doubled several times in 2017.
10. Some coins not available in other fiat currencies –
Some cryptocurrencies can only be traded in one or a few fiat currencies. This
forces the user to convert these currencies into one of the major currencies, like
Bitcoin or Ethereum first and then through other exchanges, to their desired
currency. This applies to only a few cryptocurrencies. By doing this, the extra
transaction fees are added in the process, costing unnecessary money.
11. Adverse Effects of mining on the environment –
Mining cryptocurrencies require a lot of computational power and electricity input,
making it highly energy-intensive. The biggest culprit in this is Bitcoin. Mining
Bitcoin requires advanced computers and a lot of energy. It cannot be done on
ordinary computers. Major Bitcoin miners are in countries like China that use coal
to produce electricity. This has increased China’s carbon footprint tremendously.
12. Susceptible to hacks –
Although cryptocurrencies are very secure, exchanges are not that secure. Most
exchanges store the wallet data of users to operate their user ID properly. This data
can be stolen by hackers, giving them access to a lot of accounts.
After getting access, these hackers can easily transfer funds from those accounts.
Some exchanges, like Bitfinex or Mt Gox, have been hacked in the past years
and Bitcoin has been stolen in thousands and millions of US dollars. Most
exchanges are highly secure nowadays, but there is always a potential for
another hack.

13. No refund or cancellation policy –