Cryptocurrencies have become an important topic in the last two years, mainly due to the incredible rise of Bitcoin. Let us remind you that Bitcoin has reached the maximum price of almost $ 20 thousand towards the end of 2017, which caused huge interest from investors, financial institutions and individuals all over the world.
However, the fact remains that people do not know too much about digital currencies. It is a complex phenomenon that offers users a number of advantages, but it also has some negative aspects. In this article, we'll show you the pros and cons of cryptocurrency trading.
Five advantages of cryptocurrency trading
Let's start with the most important advantages of cryptocurrency trading. Here are our five main reasons:
The first advantage of using cryptocurrencies is very practical. Digital coins are decentralized and you do not have to pay all those annoying fees, commissions and transaction costs. If you want to know more about the differences in the cost of the transaction between traditional banking systems and blockchain-based systems, we advise you to consult cryptocurrency trading experts.
Traditional banks and other financial institutions make you wait a full day (in the best case) to complete the money transfer. On the other hand, cryptocurrencies work much more efficiently, so you do not have to wait more than a few minutes.
- Lucrative business opportunities
Cryptocurrencies represent a low-investment and high-return business opportunity because they have the potential to grow drastically over a relatively short period. For example, alt-coin Aeron (ARN) experimented an increase 337.29% in just 24 hours in January 2018. Under such circumstances, you can really make a lot of money by avoiding spending too much on cryptocurrency projects.
We have already said that cryptocurrencies are decentralized, which means they are free of government influence or any other type of state authority. In other words, governments and central banks can not overproduce digital money, cause inflation and reduce the value of your money online. For example, there are 21 million Bitcoins and the number will never change.
The cryptocurrencies are based on the blockchain, a technology that builds immutable public registers. No one can change the transaction history, so there can be no attempts to counterfeit, fraud or identity theft. The best proof is a simple fact that Bitcoin has never been hacked. In addition to this, you completely control your funds as there is no third-party provider that blocks your account for any reason.
Five disadvantages of cryptocurrency trading
Now that you have seen the greatest benefits of using cryptocurrencies, it is time to see the other side of the coin as well. Without further ado, here are the counter-trading of digital coins:
- Not a widespread technology
Most people have heard of Bitcoin and other cryptocurrencies, but only a small percentage have actually invested in digital currencies. A report shows that the size of the blockchain technology market is bound to grow $ 2 billion by 2021. This is by no means a small amount, but it is almost nothing compared to the traditional financial market. Under such circumstances, your options are limited and you will not be able to cooperate with the vast majority of traditional companies.
On the one hand, cryptocurrencies give you the opportunity to make money very quickly, but they also create a high-risk environment for investors. The price of Bitcoin and other coins can collapse in a few minutes. Therefore, you can also lose money if you do not plan your investments carefully.
Cryptocurrencies do not guarantee full-time anonymity, but technology can certainly help criminals engage in much simpler illicit activities. Central authorities fear cybercriminals are already using blockchain technologies for money laundering, terrorist financing and similar activities that would otherwise be much more difficult to manage.
Blockchain technology can process transactions almost instantly, but does not support more than a few transactions at the same time. For example, Bitcoin allows up to seven transactions per second, while Visa processes almost 25 thousand requests per second.
What does it mean? It means that the cryptocurrencies have a limited resizing possibility for the moment. It takes a much more powerful system to increase the regular commercial use of digital currencies, but it is not likely to happen too soon.
Governments can not completely control cryptocurrencies, but they can certainly adopt new laws in an attempt to regulate the market. Some countries (Japan, Switzerland, Singapore) are already developing their cryptocurrencies, while some are trying to ban it (Ecuador, Macedonia, Morocco). The market is subject to change, so it is impossible to predict the future of cryptocurrencies.
Cryptocurrency trading has become extremely popular in recent years, but many investors still do not understand this concept in its entirety. The truth is that digital currencies offer users a wide range of benefits, but they also have some disadvantages.
If you are thinking of investing in this field, you must listen to both sides of the story. We have created this article to show you five advantages and disadvantages of using cryptocurrencies. We hope it will help you understand if you want to start cryptocurrency trading, but feel free to leave a comment if you need more information on this topic.