Cryptocurrency has the following advantages:
1. A method of inflation protection:
Several currencies have declined in value due to inflation. Nearly every cryptocurrency is released with a tough and fast amount at the time of its launch. The ASCII computer file specifies the number of each coin; Bitcoins are limited to 21 million worldwide. Since the market demand increases, its value will also increase, which may help to stabilize the market and, within the long run, prevent inflation.
2. Private and Secure:
Cryptocurrencies have always been concerned with privacy and security. Blockchain ledgers use mathematical puzzles that are hard to decode. This makes cryptocurrency more secure than ordinary electronic transactions. To improve security and privacy, cryptocurrencies use pseudonyms that don’t link to any user account or stored data.
3. Self-managed and Self-governed:
The management and maintenance of any currency are also important to its development. The cryptocurrency transactions are stored on the hardware of developers and miners, who receive the transaction fee as a reward for doing so. Due to the acquisition of it by miners, the transaction records are accurate and up-to-date, ensuring the integrity of the cryptocurrency as well as the decentralization of records.
Cryptocurrencies are mostly decentralized, which is their main advantage. Often, cryptocurrencies are controlled by the developers using it, by those who own a significant amount of the coin, or by a corporation that develops it before it’s released onto the market. By decentralizing the control of currency, everyone can determine the flow and thus value of the coin, which, in turn, will keep it stable and secure, unlike fiat currencies which are controlled by the government.
5. Funds can be transferred easily:
Cryptocurrencies have always remained the best solution for transactions. Cryptocurrency transactions, whether domestic or international, are lightning fast. The verification will take little time since there are only a few barriers to overcome.
6. Transactions that are cost-effective:
Transferring money across borders is one of the most effective uses of cryptocurrencies. A user’s transaction fees are reduced to a negligible or zero amount with the help of cryptocurrency. The system eliminates the need for third parties, like VISA and PayPal, to verify a transaction. No additional fees need to be paid.
7. The currency exchange goes smoothly:
Cryptocurrency can be purchased with many currencies, including the Indian rupee, US dollar, euro, British unit of measurement, and Japanese yen. A variety of cryptocurrency wallets and exchanges allow one to convert one currency into another by trading in cryptocurrency, across multiple wallets, and by paying minimal transaction fees.
Disadvantages of Cryptocurrency:
1. High energy consumption:
The process of mining and other cryptocurrencies requires substantial computing power and electricity input, which makes it highly energy-intensive. Bitcoin is often the main culprit in this regard. To mine Bitcoin you need powerful computers and plenty of electricity. Ordinary computers cannot do it. Many Bitcoin miners are located in countries where coal is used to produce electricity, like China. As a result, China’s carbon footprint has increased significantly.
2. Transacting illegally:
Because cryptocurrency transactions are highly secure and private, it is difficult for the government to track down users using their wallet addresses. Historically, Bitcoin has been used as a method of payment (exchanging money) during illegal transactions, including buying drugs on the dark web. Through a clean intermediary, some people have also used it to convert their illicitly acquired money to hide its source.
3. The risk of data loss:
The developers wanted virtually untraceable ASCII documents, robust hacking defenses, and impenetrable authentication protocols. Positioning money in cryptocurrencies would be safer than in physical cash or bank vaults. There is no way to retrieve a lost private key to a Bitcoin wallet or other cryptocurrency. The wallet and the coins inside it remain locked away. The user might be lost as a result.
4. A few people hold most of the power:
Decentralized cryptocurrencies are known for their decentralization, but their creators and some organizations still control the flow and amount of some currencies on the market. These holders can manipulate the coin’s price by manipulating its supply and demand. These manipulations are even affecting hugely traded coins, such as Bitcoin, whose value doubled several times in 2017.
5. Purchasing NFTs with other tokens:
In some cases, it is only possible to trade cryptocurrencies in one or a few fiat currencies. A user is forced to convert these currencies into one of the most popular currencies, like Bitcoin or Ethereum, before converting it into their desired currency through other exchanges.
6. Refunds or cancellations are not permitted:
The sender cannot retrieve a coin if there is a dispute between concerned parties, or if funds are mistakenly sent to the wrong wallet address. A lot of people may use it to cheat other people out of their money. As a result of a dispute between concerned parties, or if someone sends funds to the wrong wallet address, the coin cannot be retrieved..
7. Vulnerable to hacks:
Cryptocurrencies are extremely secure, but exchanges do not seem to be secure enough. Users’ wallet data is stored by most exchanges to determine their user ID. When hackers steal this data, they gain access to many accounts.
With access to those accounts, hackers can efficiently transfer funds. Several exchanges, including Bitfinex and Mt Gox, have been hacked within the past couple of years, and Bitcoin and countless US dollars have been stolen. Nowadays, most exchanges are highly secure, but a further hack is always possible.