Sat, 24 Jul 2021

Pros & Cons of Cryptocurrency People Should Know About

7Newswire
13 Jul 2021, 21:42 GMT+10

Health problems aren't only the problems that came along with COVID-19, people suffered a lot from the business aspect as well. With that being said, most of you must be aware of the online earning trends going across the globe. If you've spent any time looking for investment opportunities online, you've probably come across Cryptocurrencies like Bitcoin and Ethereum. However, there are some pros and cons of cryptocurrency people should be aware of.

Brief info on crypto:

Cryptocurrency is a digital or virtual money that is governed by a decentralized system rather than a centralized system. The majority of crypto is based on a technology called Blockchains, which is essentially a database that records every transaction across several servers or computers.

Some of the main cryptocurrencies are:

  • Bitcoin
  • Ethereum
  • Binance coin
  • Cardano
  • Ripple

Before you set your bar too high or low thinking to make money with cryptocurrency here are some pros and cons of cryptocurrency you should consider:

Pros:

  • Confidentiality and security

Data is one of the most crucial things one needs to protect. Hackers can steal customer data in a variety of methods.

Each crypto transaction, on the other hand, is a one-of-a-kind exchange between two parties, protecting consumers from risks like identity theft. Due to blockchain technology, the transaction is secure and private. It is built on complicated mathematical challenges designed to make it difficult for hackers to collect personal information from consumers.

  • Inflation protection may be possible:

For months, cryptocurrency has been discussed as a possible inflation hedge. The claim is that because crypto is not regulated by central banks or the government, it is immune to inflation. Unlike cash, where the central bank can create as much as it wants, most crypto (especially Bitcoin) has a finite supply that can only be distributed at a given time.

As more individuals embrace them, the limited supply resists inflation and raises their worth.

  • Decentralized

When it comes to cash, the value is set by the federal government or regulatory agencies. When it comes to crypto, however, this is not the case. The value of most cryptocurrencies is set by the people who own the majority of the coin's value. Because of the decentralized nature, no central groups or institutions can tamper with or influence the value.

  • No middleman

The absence of a middleman is one of crypto's defining characteristics. This eliminates the need for third parties such as a bank or a credit card firm, making fund transfers easier and less expensive. Instead, public and private keys, as well as various incentive schemes, are used to safeguard these transfers.

Cons:

  • Market volatility

The cryptocurrency market is extremely volatile, resulting in significant gains or losses. The value of coins can fluctuate dramatically in a short period of time. In 2017, Bitcoin reached new highs of around $20,000 per coin. It is currently valued at roughly $11,000 per coin as of August 2020.

  • Implications for Taxation

The Internal Revenue Service (IRS) has stated that 'virtual currency transactions' are taxed under the law in the same way that any other property transaction is. As a result, bitcoin transactions may be required to be reported on tax returns. It can be difficult to figure out how to declare the value and what taxes should be paid.

  • It isn't accepted everywhere

Because of the low transaction costs, cryptocurrency transactions are appealing; yet, cryptocurrency payments are not generally accepted. Only a few businesses accept cryptocurrency.

  • Criminal Behavior

The major payment assets for dark web transactions are cryptocurrencies such as Bitcoin, Ether, and other types of cryptocurrency. Criminals prefer the privacy given by cryptocurrencies, which is analogous to the perks of paying with 'cash.'

There have been well-publicized instances of cryptocurrencies being used for money laundering, drug trafficking, and other illicit activities.

  • Scams

Due to the decentralized nature of cryptocurrency, fraudulent currencies can appear out of nowhere. And no regulatory authorities are capable of detecting it. Developers can design their own currencies and start a Ponzi scheme on their own. This is true for tens of thousands of altcoins.

More Virginia News

Access More

Sign up for Virginia State News

a daily newsletter full of things to discuss over drinks.and the great thing is that it's on the house!