Advantages and disadvantages of cryptocurrency

Ole
28.09.2021
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Blockchain cryptocurrency

If you are considering buying cryptocurrency, it may be a good idea to familiarize yourself with the various advantages and disadvantages of crypto. Cryptocurrency has received a lot of coverage in the media in recent years, and one often hears that it is a risky investment.

At the same time, cryptocurrency can have many benefits. The currency is decentralized, which means that it is not dependent on central banks or the authorities.

Cryptocurrency is also considered to be a fast and secure payment method, and a potential investment object.

Let’s take a closer look at the biggest advantages and disadvantages of buying cryptocurrency!

Benefits

Cryptocurrency can be described as a digital currency that is easily negotiable, and that uses cryptographic solutions to secure and verify transactions. Control over cryptocurrency is not centralized at any bank, and is therefore called «decentralized currency».

Cryptocurrency therefore differs from ordinary currency, which is controlled by the authorities. The mechanics behind crypto offer many good benefits for you who own the currency.

Secure and resistant to hacking

Cryptocurrency is in most cases decentralized so that currency control is distributed through a distributed blockchain or database. This database is public to all in the relevant network.

Bitcoin is among the solutions that use blockchains. A block in the block chain contains information about the current transaction, as well as all previous transactions. You can therefore not change a block without it detaching from the rest of the chain.

This makes it extremely difficult to hack cryptocurrencies, which in turn makes it a secure solution. There are also a number of other security aspects of cryptocurrency that contribute to the solution often being considered safer than the use of traditional currency.

Blockchain

Blockchain

Lightning fast and cheap transactions

Another advantage of cryptocurrency is that the digital currency facilitates very fast and efficient transfers – also across national borders.

Ordinary transfers with traditional currency can in many cases take both hours and days. With cryptocurrency, in many cases you can transfer money in seconds or minutes.

There are also low costs related to transfers with cryptocurrency. The fees are usually very low.

Anonymity and privacy

Perhaps the biggest reason why many people want to buy cryptocurrency as a means of payment is the anonymity you get. When transferring traditional money, the recipient and the bank will usually be able to see the amount and name of the person who transferred the money.

With cryptocurrency, the user can hide behind an address made of numbers and letters. This will not be able to reveal your identity. Many people appreciate this, especially in today’s digital society where privacy is becoming increasingly important.

Exciting investment object?

Another advantage of cryptocurrency is that buying a currency can in some cases be considered an investment. One can constantly read about people in the media who have made good money buying cryptocurrency cheaply, and then sold it when the price has increased.

It can be risky to invest in cryptocurrency, but also very exciting as long as you do it responsibly.

Disadvantages

Before you buy cryptocurrency, it can also be a good idea to familiarize yourself with potential disadvantages. When it comes to disadvantages, one thinks first and foremost of risk and volatility.

Let’s take a closer look at the main disadvantages of buying cryptocurrency.

High volatility and rapid price changes

Cryptocurrency is generally known to have very high volatility , ie a high risk of sudden exchange rate fluctuations. The value of cryptocurrency can change abruptly, making it more risky to invest in the currency.

However, keep in mind that low-volatility cryptocurrencies also exist. These are called stack coins, and are cryptocurrencies that follow the exchange rate of, for example, dollars, commodities such as gold or euros.

Few players offer cryptocurrency as a means of payment

Another disadvantage of cryptocurrency is that there are relatively few places where you can use the currency as a means of payment. You can pay with cryptocurrency at some online casinos and the like, but far from everyone can offer it.

This means that you often do not have the opportunity to use cryptocurrency as a means of payment where applicable – whether it is e-commerce or something else.

Easier to run criminal businesses

Another disadvantage that can be linked to cryptocurrency is that the increased anonymity makes the currency appealing to many criminals. It is known that cryptocurrency has been used by criminals who engage in money laundering, collection of ransom and the like.

However, the vast majority of those who have cryptocurrency are ordinary people who are not criminals.

Not necessarily completely anonymous

The last disadvantage of cryptocurrency is that the currency does not necessarily anonymize users as much as one would think. If for some reason your number and number address could be connected to you, you are no longer anonymous.

Remember to always take good care of your crypto key, and take precautions when you are online. Then you increase the chance that your privacy is taken care of.

Are you going to buy cryptocurrency or not?

After reading through the biggest advantages and disadvantages of cryptocurrency, you may have formed a better picture of the digital currency form. We believe that the advantages outweigh the disadvantages, when it comes to buying cryptocurrency. If you want to buy cryptocurrency yourself, you can easily register with an approved crypto exchange online.

FAQ

Hvor kan jeg handle kryptovaluta?

Du kan handle kryptovaluta hos en kryptobørs på nett. Det finnes flere kryptobørser som er registrert hos Finanstilsynet, som for eksempel eToro og Firi.

Hvilken kryptovaluta bør jeg kjøpe?

Du bør kjøpe en kryptovaluta med god framtidsutsikt for verdiøkning. Det kan lønne seg å kjøpe når kursen er lav, og selge igjen når verdien har økt.

Hva er den største fordelen ved kryptovaluta?

En av de største fordelene ved kryptovaluta er at man kan foreta transaksjoner uten å måtte gi fra seg navn, adresse eller annen sensitiv informasjon til motparten.

Kan jeg tjene penger på kryptovaluta?

Ja, du kan potensielt tjene penger på å investere i kryptovaluta. Husk likevel på at du også kan tape penger. Du kan også tjene litt på mining eller utvinning av kryptovaluta.

Kryptovaluta i et fremtidsperspektiv – ja eller nei?

Author Ole

Ole jobber som freelance forfatter/skribent, men er også med på vårt team. Han har hatt en interesse for krypto i flere år og det er naturlig for han å opplyse andre om denne fantastiske teknologien. Ole sier selv at å skrive om kryptovaluta ikke er en jobb, men en lidenskap! For oss kan det jo ikke bli bedre!