Is cryptocurrency reliable?
Investing is always risky, according to consumer reports experts say cryptocurrency is one of the riskiest investment options. However, what cannot be denied is that digital currencies are also very hot commodities nowadays.
There are many reasons for not investing in digital currencies even though they became very popular and very a pealing, specially when it comes to getting rich in seconds. On this post I have listed below the most common issues that can be major reasons for one not to start investing in digital currencies.
1: Scalability
Probably the biggest problem with cryptocurrencies is the scaling issues that arise. Although the number of digital coins and their adoption is increasing rapidly, it is still lower than the number of transactions that pay for giant visas every day. In addition, transaction speed is another important metric in which digital currencies cannot compete with the same level competitors such as Visa and MasterCard. This evolution is complex and difficult to extract easily. However, some of them have already proposed a number of solutions, including options for resolving the issue of power networks, sharding and stacking, including scalability.
2: Cybersecurity issues
Cryptocurrency is subject to cyberspace breaches and may fall into the hands of hackers. We have already seen evidence that many ICOs broke up this summer and millions of dollars were spent by investors. Reducing this will require continuous improvement in the security infrastructure, which will require long time.
lack in inherent value is a major problem and one of the things that Buffet referred to a few weeks ago when he described the cryptocurrency ecosystem as a bubble.
3: Price volatility and lack of inherent value
This is an important issue, but it can be solved by directly linking the value of cryptocurrency to tangible and intangible assets (as we have seen how some new competitors doing that by diamonds or energy derivatives). Wider adoption should also increase consumer confidence and reduce this volatility.
4: Regulations
Even if we perfect the technology and eliminate all of the problems listed above, the risk of investing in this technology will increase as long as the technology is adopted and controlled by the federal governments. Other concerns with technology are often logical. For example, when technology improves, changing the required protocols takes more time and disrupts the normal flow of operations.
Conclusion
Even though cryptocurrencies have become very popular and getting more and more into our lives one should be very careful when dealing with these digital currencies and never get excited by what is written on the internet and put all his/her money on something which can disappear in less than seconds.
