Drawbacks to Cryptocurrencies

Lack of Understanding Cryptocurrency

Cryptocurrency is one of a kind digital currency without likeness. Because not many payments nowadays are without the involvement of a third-party, lower risk payment, little to no fraud cases and most of all, universal in its usage.  However, considering the online nature of Cryptocurrency, there are flaws that come with it. There are a few major setbacks concerning Cryptocurrency.

In most cases, people are still unaware of the digital currency world and the potential it holds. This is similar to when the usage of credit card was first announced and the reception towards it is fairly similar to Cryptocurrency. Back then, people wouldn’t even think that paying things using a mere card is possible, what’s more using a whole new digital currency.

Because it is different, and it doesn’t involve cash directly, people shy away from it and constantly doubting its effectiveness. Additionally, it involves online access to make it work. The idea of having to pay things or transfer money online is convenient to some but most are still skeptical about it. In order to make Cryptocurrency acceptable around us, the people need to be
educated about it to be able to include it in their daily lives. One way to do it is through networking. But fact is, there are not many places online where people can learn about it.

Lack of Protection And Guarantee

In the case of traditional currency, there’s Central Bank who governs the authority on every nation’s money. No higher authority can suddenly decide that they no longer want to use their country’s currency to trade without protest and rejection.

There are proceedings to follow, documents to file, approvals, and many other protocols to follow. However, that is not the case with our digital currency. There is no Central Bank who governs Bitcoin, which means no one can guarantee its minimum valuation. The value of Bitcoin for example, will fall tremendously should a major group of merchants decided to just ‘discard’ Bitcoins and leave the system. This will inevitably put other users who have invest thousands of dollars into Bitcoins.

Technical Shortcomings

When online banking made its way to our life, there’s always a risk of a sudden server failure, power shortage, and even hardware lags. If it happens and you ended up getting charge but didn’t receive the online movie tickets or flight tickets, you can always call bank service provider, or go to the physical bank instead and declares your case.

Most of the cases if you show evidence of your payment you will get proper compensations or feedbacks. That is not how it works with Cryptocurrency. First of all, this currency does not have a bank to negotiate and help you around. There is no fixed number that you could call and ask for clarification. So, if you bought your goods using Bitcoins for example, and the merchant didn’t send the items you purchased, there is nothing you can do to reverse the transaction or refund. You can’t complain it to the police or any relating authority for that matter.

Similar to data corruptions or virus infections, if you hard drive crashes and your wallet file is corrupted your Bitcoin is lost forever. There is nothing you can you do restore it and those ‘coins’ will be ‘orphaned’ in the system.

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