5 Pros and Cons of Digital Currency You Need to Know

5 Pros and Cons of Digital Currency You Need to Know

Following the recent boom in cryptocurrencies like Bitcoin, many people are left wondering what digital currency is, why it’s relevant to them, and what the future of cryptocurrency looks like. If you’re still curious about what digital currency means for you, here are five pros and cons to consider when deciding whether it’s worth your time or not.

1) Security

One of the largest concerns many people have about digital currency is security. Since currency only exists digitally, it’s possible for hackers to break into systems and steal cash or cryptocurrency—which could wipe out a person’s savings completely. It can also be hard to recover stolen funds; once they’re in someone else’s account, you may never see them again.

That said, there are some measures you can take to protect your digital wallet: Make sure your computer has up-to-date antivirus software installed. Be careful when downloading apps on your phone—you don’t want any malicious software sneaking onto your device! And always keep an eye on your accounts so that you know when something looks off (if you notice anything suspicious, contact customer service immediately). A few online wallets offer two-factor authentication, which means if someone tries to log in from an unrecognized device, you’ll get a text message with a special code you need to enter before they can access your account. This adds another layer of protection beyond just using strong passwords.

2) Anonymity

Some people like that digital currency allows for greater anonymity than traditional currencies; after all, if you’re carrying around a wad of cash, it’s pretty obvious that you can buy things. With digital currency, on the other hand, it’s easier to shield your transactions from scrutiny. However, while there are some clear benefits to increased anonymity in many financial transactions, there are also downsides.

If a thief gains access to your computer or smartphone wallet where you store your Bitcoin, they could potentially see your entire transaction history. Furthermore, at least one company has been able to track down Bitcoin thieves through blockchain analysis—and these days even most non-techie criminals know enough not to put all their eggs in one basket. So, even though digital currency does offer more privacy than cash, it’s not necessarily anonymous. And when you lose your digital wallet (which is kind of like losing an online bank account), you don’t have as much recourse as someone who loses his physical wallet with cash inside.

3) Versatility

Convenience is one of the digital currency’s biggest benefits. You can purchase them online, through an exchange, or at a physical location near you. No matter how you choose to buy, your currency will be immediately available in any country—without worrying about being charged additional fees. Also, unlike paper money which loses value over time, electronic money grows more valuable as it gains popularity around the world.

The U.S. dollar has lost up to 95 percent of its value since it was first printed in 1792; meanwhile, Bitcoin’s price has steadily risen for several years now—from $0 to over $700 today (and counting). This can make digital currency an extremely lucrative investment over time if adoption continues as expected. As an added bonus, many people also find that using digital currency is easier than carrying cash or credit cards.

There are no limits on what you can spend your coins on—including other currencies like dollars and euros. Many merchants even offer discounts when paying with crypto! And thanks to their decentralized nature, there’s no risk of identity theft associated with buying digital currency. It’s basically like sending cash digitally: Once your transaction is complete, neither party can take back their funds or access someone else’s personal information by accessing accounts online.

4) Adoption rate

As more businesses accept Bitcoin, more people are encouraged to try it out. This creates a positive feedback loop: People start accepting Bitcoin because businesses do, which encourages even more businesses to accept it. The digital currency’s viability increases along with its rate of adoption. However, there is still plenty of room for growth in terms of how many merchants accept it as payment. In 2017, only about 20 percent of U.S.-based online retailers accepted Bitcoin—and that number has been dropping steadily since 2014. But if you have faith in cryptocurrencies (and their underlying blockchain technology), you might see these numbers as an opportunity rather than a deterrent.

If only 1 percent of online retailers eventually adopt cryptocurrency payments, that’s still thousands more than now accept them—and plenty for you to profit from as an entrepreneur. It’s worth noting that some people believe cryptocurrencies will never become widely adopted. Skeptics argue that they’re not backed by anything tangible, so they’re inherently risky investments—especially given their high volatility. It’s also easy to transfer money between countries using traditional currencies like dollars or euros, whereas sending cryptocurrency requires one person to send and another person to receive.

And because all transactions are logged on a public ledger called a blockchain, users can see exactly how much someone owns at any given time; they can’t do that with cash or credit cards. Some critics argue all of these factors mean most consumers will continue to use traditional payment methods instead of adopting cryptocurrency ones.

5) Fees

While digital currency transactions are usually cheaper than those made in dollars, there are some major downsides. The most obvious is that it takes time for transactions to go through. In addition, if you use a centralized currency exchange like Coinbase or Bitstamp, you’ll need to give up a certain amount of anonymity—there’s no way around it.

If you choose to do business with someone who wants an I.D., your name will be attached to your wallet address, which means anyone can see how much money you have (and how much they can get from you). If that makes you uncomfortable, look into decentralized exchanges such as Bitsquare instead. These don’t require identification, so all you need to do is download their software and start trading. However, keep in mind that many of these platforms only deal with Bitcoin right now; other currencies may come later.

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