Previously, it was mentioned how 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 4 major setbacks concerning Cryptocurrency.
The first one is the lack of understanding over 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.
The effort to learn a whole new world of currency is requires a lot of time and
energy. Most would think it is not worth their time because it is not commonly
known anyway.
Even though some businesses are accepting bitcoins, the list is significantly
small compared to traditional currencies.
This is probably due to the lack of knowledgeable staff that understands the
ways of digital currencies. Plus, they need to help educate their customer
about it and how to use it for a smooth transaction.
This, again, will take a longer time and effort to teach others.
Another drawback of Cryptocurrency would be its 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
into a major loss. There is no one to contact to file these losses, or rules to help
compensate it.
Thus, the decentralized system of Bitcoin is what we call a double-edged sword
on its own.
The next disadvantage is its 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.
The last major disadvantage of Cryptocurrency would be because it is still
developing.
When things are still developing, it is prone to many risks. There are so many
incomplete features that can be improved but it takes longer time to finalize it,
especially if it has no physical form.
With traditional currency, despite the method of payments nowadays are done
online, and without us actually seeing the physical money transferring from
one account to another, in the end of the day, when you reach the ATM, you
are capable of holding that cash.
You can use it to buy stuff from the stores physically, and online. That shows
how developed our traditional currency is.
Since Cryptocurrency does not have any physical forms, its usage is obviously
restricted.
It must always be converted to traditional currency to enjoy its worth.
According to studies, there was a time when there is a proposition to store
Bitcoin wallet information in cards. However, there is neither consensus nor
continuation of the proposal.
Most probable reason would be because merchants find it unfeasible to
support all the cryptocurrency cards. There is no system for an immediate
payment using the cards, thus users are forced to convert it into real money
anyway.
As you can see, there are 4 disadvantages of Cryptocurrencies. There is a lack
of understanding towards this digital currency. Plus, there’s minimum
protection and guarantee when using is. Because it is mostly operating online,
it is bound to experience all kinds of technical flaws and it is still developing.
The world of cryptocurrency is relatively new to some people and it can be
difficult to understand. Because nobody really knows what currencies will or
can be adopted and at what scale.