Akinpelu Babatola Guest Writer
This is the age of digital currency. Thanks to recent technology trends, the world of finance has been changed distinctively. Thanks to this, many questions have been raised concerning the future of all transactions.
But there is one central question; Is cryptocurrency better than the current paper money system?
This is not a question quickly answered. While cryptocurrency is excellent in many aspects, it is not without its flaws. Since the advantages and disadvantages of the current system are already known, it is much more appropriate that we discuss the pros and cons of the newer system.
So let’s get started.
The Pros of Cryptocurrency
- All transactions are entirely transparent.
All digital currencies make use of blockchain technology. This is an open ledger system that records all transactions and makes it available for anyone to view at any point in time. So if you are the kind of person who favours transparent banking systems, trading in cryptocurrency is definitely for you.
- All transactions are instant.
By transacting in cryptocurrency, you can carry out your transactions at any point in time and relatively instantaneously. By making use of your mobile device, you can move vast sums of money around with the simple touch of a screen. This attribute makes cryptocurrency perfectly suitable for any of your online transactions as well as offline transactions.
- The costs of transactions are relatively low.
While banks and other online payment systems are known for attaching expensive fees to all transactions, the cost of transacting in cryptocurrency is relatively low. This is excellent for merchants who carry out several hundreds of transactions daily. By taking advantage of the low transaction costs, you can afford to make as many transactions as you need to.
- Cryptocurrency offers you privacy and freedom from external influences.
While this might seem like a con at first glance, it is definitely a pro.
Cryptocurrency operates on a decentralized system. This saves it from being controlled by a government or a central body and makes it much less susceptible to inflation. Thanks to this, all users who transact in cryptocurrency are assured that there is no one monitoring their spending and incomes asides from them.
If anyone were to look, the only available information would be the transaction details contained in the open ledger. This only gives information about the transaction and not the person behind the transaction.
Now let’s talk about the cons of cryptocurrency.
The cons of cryptocurrency
- Cryptocurrency is volatile.
Most digital coins have their values determined by the number of users. This makes the value of all digital currencies very volatile. They can be worth thousands one day, and they can drop to hundreds the next morning. This volatility means you can earn quite a lot or lose quite a lot.
This volatile nature is bound to change as more and more users take advantage of this innovation in the finance world.
- Funds lost cannot be traced.
In the unlikely case of a security breach, the untraceable nature becomes a disadvantage. Without any information on the recipient of the lost funds, it becomes impossible to process retrievals.
Also, criminals can exploit the decentralized nature to carry out their illegal activities. This makes it impossible for governments to monitor and trace them at all. This is a significant reason why some governments have banned cryptocurrency in their countries.