Digital Money / Cryptocurrencies advantages & disadvantages

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Bitcoin, Ethereum, Ripple, Litecoin, Dash, Peercoin, Dogecoin, Primecoin, China coin are some of the digital currencies. Digital currency ( Digital money) is a mode of payment that exists as an electronic form, it is not tangible. The transactions are done electronically using computers, smartphones or any other capable electronic device. By the end of 2017, there were more than 180 types of digital currencies but only a few were used for transactions and accepted by businesses and merchants.

Bitcoin and Ethereum were the main digital currencies which were used in trading around the world. Even though central banks around the world have not yet fully recognized the digital currencies, some financial agents have adopted digital currencies into investments. Bitcoin was created in 2009 by an unknown individual or a company using an alias name Satoshi Nakamoto, and the transactions are direct without any banks or financial institutions involvement.

Advantages & Disadvantages of cryptocurrencies

The advantage of digital currencies is it is easy to access and can be accessed around the world digitally. The payments can be made easily without entering many details, you just need the wallet address of the payer and the name of the receiving enterprise.

Digital currencies are faster, due to its use of blockchain technology, it removes the delays, and any payments to other parties can be transferred without waiting for any approvals from third parties like banks. The transaction fees are very low compared to conventional money. Since digital currencies are decentralised you can do all transactions privately, you do not need to share your identity, details of the beneficiary or the transactions.

When you use digital currencies, you can remain unanimous to a certain extent, and nobody can steal your identity. You can manage your own wallet the way you like since it digital, and you do not need anyone to keep your trust on. When you do conventional payments, banks are involved and lots of fees and restrictions and exchange rates are in place when undertaking international trading transactions, but in digital currencies, you do not have to worry about all these, and it is very easy to make payments for international trade.

The disadvantages of digital currencies are, it is difficult to understand the technology behind it, many people are investing on gut feel or since others are investing. Due to the lack of knowledge about this blockchain technology there are risks of hacker attacks. Digital currencies are not accepted widely yet due to their volatility. You can lose your wallet easily if your usernames and passwords are forgotten or hacked, retrieving a lost wallet is impossible even with legal involvement. When you make a payment or transfer using cryptocurrency there is no way of reversing it, even if you transfer by mistake, maybe you can request them a re-transfer but if they deny then its money lost.

cryptocurrencies are still uncertain and volatile, the value fluctuate due to many reasons, including demand, and introduction of new cryptocurrencies and new financial regulations pertaining to cryptocurrencies.

Still, the world is learning about cryptocurrencies and 90% of the investors do not have have the full knowledge of the systems or algorithm involved in this blockchain technology which is used in cryptocurrency. If you are someone who is planning to invest in digital money/cryptocurrencies, then invest a small amount which you are comfortable in loosing in worst-case scenarios. Many people have invested in cryptocurrencies and earned their buck and got out of it quick. This is something which might give you a quick buck or lose it all. Its always better to try it if you think you can take that risk. Earning and losing are 50:50