Advantages and disadvantages of cryptocurrencies-min
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Advantages and disadvantages of cryptocurrencies

It is important to highlight that cryptocurrencies are characterized by being very volatile assets, which at first makes them have great advantages, but also great drawbacks.


Among the advantages of cryptocurrencies, the following can be highlighted:

They are global currencies.

Cryptocurrencies are not regulated by government agencies financial entities or banks, so they can be used by anyone and anywhere in the world, without limits or censorship. Cryptocurrencies are simply controlled by their users, so no modifications can be made to the transaction conditions without the consent of the rest of the holders of said cryptocurrency. These are what are called government tokens since they allow you to vote on improvements and new implementations of that cryptocurrency.

They are safe

Currently, counterfeiting cryptocurrencies is impossible thanks to the sophisticated cryptography they use. Each person has their cryptographic keys and it is materially impossible for fraud to occur if the private keys of the owner of the cryptocurrencies are not available.

Some cryptocurrencies are deflationary

There is a specific and limited number of cryptocurrencies, and their issuance reduces over time. Excess supply that decreases the price of the cryptocurrency is not allowed.

They carry out irreversible transactions

Cryptocurrencies, as they are not regulated by a central body, do not allow a third party to cancel or modify a transaction already made once the good or service received has been paid.

They allow immediate transactions

In international buying and selling processes, the use of cryptocurrencies can greatly speed up these processes, especially between countries that do not have financial treaties with each other.

They are transparent

All transactions through Blockchain are public and are recorded in a network of multiple devices, storing the data in an accessible and transparent way for all users, making it very difficult to introduce alterations in the processes.

They facilitate investigation

since all transactions are public, the task of the police and intelligence services is facilitated since they can more easily trace the receipt and sending of money from any wallet, without the need for judicial authorization. The key is that to know who the owner is, they must be able to associate their identity with a particular wallet, as occurs with any traditional bank account.


Cryptocurrencies also have some disadvantages, which give rise to mistrust and the low acceptance that these currencies still have:

Possible loss of money:

If the private key to access the virtual wallet is lost, all the virtual money that was there is lost. Therefore, even if some security is lost, it is advisable to have a backup copy of the wallet.

As they are not protected by any banking entity, legislation, or insurance, they have practically the same risks as cash, except that in this case, you can keep backup copies.

Cryptocurrencies can be stored under your physical possession in a cold wallet ( not connected to the Internet) or in a hot wallet ( connected to the Internet), which may or may not be guarded by a third company.

If the cryptocurrency issuer pays for an unsatisfied good and service, or a transaction is sent to a wallet in error, a transaction already made cannot be rolled back or refunded.

Volatility in their value

Their sudden price variation with abrupt rises and falls makes it difficult for them to be used in the purchase and sale of goods and services, but also as a financial investment asset. On the other hand, volatility is in turn associated with high returns, which allows large profits for those investors with less risk aversion.

Continuous changes and lack of specific regulation

Although work is currently underway on the regulation of cryptocurrencies, the truth is that these regulations are pending approval. Additionally, fluctuations in the price of cryptocurrencies can carry tax risks.

Distrust of potential users

This distrust is produced both by the price fluctuations of this virtual market and by the existing lack of knowledge since there is still a significant barrier to entry. Furthermore, not knowing how other users operate or how they use cryptocurrencies can cause many people to avoid using them.

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