Top 5 Disadvantages of Cryptocurrency
Top 5 Disadvantages of Cryptocurrency

Top 5 Disadvantages of Cryptocurrency

Although there are those who laud cryptocurrency and the digital currency has a huge fan base, only touted to grow in the near future, many individuals are wary about cryptocurrency in India. Cryptocurrency disadvantages have been cited by the rich and famous, and successful investors like Warren Buffet have referred to the digital currency as  “the next bubble”. Considering that bubbles burst, it is vital to  know what these drawbacks are so we can make informed investment decisions. 

Disadvantage # 1 - Scaling Problems 

There is a lot of hype around cryptocurrency in India and all over the world. However, one of the largest concerns about cryptocurrencies have to do with scalability. The adoption of digital coins and the sheer number of these is on the rise. Nonetheless, it is still not as high as compared to other financial transactions and operations like those of, say, a payment icon like MasterCard or Visa. in addition to this, the speed at which transactions in crypto are made is no match for players like MasterCard and Visa. The problems of scale in cryptocurrency lie in their infrastructure and technology in this area has much room for improvement. 

Disadvantage # 2 - Crypto Exchange Security 

Cryptocurrency relies heavily on digital technology. As a result of this, it is open to breaches in cybersecurity. Among some worries over dealing with any crypto exchange is the fact that accounts can be hacked into. There is already living proof of this with reports of hacking into many ICOs, costing individuals millions in dollars. The security infrastructure, thus, has to be controlled and managed better than it currently is. Traditional banking security measures are not going to cut it for digital currency safety maintenance. 

Disadvantage # 3 - Cryptocurrency Value and Volatility

Cryptocurrency in India has taken over the young and old investor’s mind with vivid thoughts of making promising returns. While many investors are riding the wave of cryptocurrency, there are several who are finding out that cryptocurrency prices tend to be prone to a degree of volatility. This is because cryptocurrency exhibits some lack in its innate value, as the digital currency is not connected to any tangible assets. 

Disadvantage # 4 - Lack of Proper Regulation

When Warren Buffet emphasised the drawbacks of crypto, the experienced investor stressed on the lack of any regulatory authority controlling assets in this market. Due to the apparent lack of any supervisory management, the system is bound to “implode”, to quote the word that Buffet used. You may perfect the inherent technology, but unless a regulatory entity does not adopt cryptocurrency, there will always stand to be a risk looming large. 

Disadvantage # 5 - Worries About Changing Technology

There are particular logistical problems of trading in cryptocurrency in India, and the world over. These are largely connected with the technology that the digital currency involves. For instance, when the technology related to cryptocurrency needs to be altered, the changing of protocols is required. This can be a tedious process and takes a long time. Hence, the regular operational and functional flow could be interrupted and cause additional issues. 

Disclaimer

This article is solely for the purpose of education and isn’t to be viewed as recommendations to invest, or not, in any digital assets in question. Good advice would be to keep your finances secured via more tried and tested instruments that are regulated in nature. These could be in the form of bonds, stocks, debentures, IPOs, mutual funds, etc. You can click here to open a Demat account and know more about different ways to allocate your funds and diversify your portfolio efficiently. 

Related Articles: Similarities and Differences Between Crypto and Forex Online Trading | 6 Things to consider before trading in Forex | What Are Cross Currency Pairs And What Do They Mean | 10 Main Benefits of Forex/Currency Trading | How Currency Fluctuations Impact your Financial Plan | Upcoming IPO | LIC IPO

angle-up