Crypto assets are quite popular worldwide for profitable investments and trades. But it is not as easy as it seems. The crypto world is quite complicated and tough to understand. Like a coin has two sides, digital currencies have both light and dark sides.
While entering this industry, you must be aware of the good side which is attracting you to invest your money. But it is unfair if you do not know its dark side. After getting complete knowledge of any innovation, you must decide whether you should proceed further or not.
If you desire to determine more about the crypto world, this write-up will help you on both sides of this industry. After knowing everything, you can decide whether to invest in it in the future. The crypto world is complex, but it is not impossible to figure out everything about this innovation.
1. About Crypto Mining and Destruction
After solving complex mathematical algorithms and using energy sources, cryptocurrency is mined. The process consumes too much electricity, and high-level hardware is required to execute the process. Undoubtedly, the crypto value has increased a lot in a decade, but now, the process takes months or years to mine little coins.
Many people prefer using renewable resources to conduct the process of saving the environment. If the mining process continues in the same manner for many future years, you will observe that all the resources will get exhausted. It can bring massive destruction to a country that is working on the mining process.
In the current state, people are investing in digital assets because it is easily available, but you cannot own a single coin after some time. The value of crypto assets will also change in the upcoming years. Therefore, you need to think about it before investing in it.
2. Scalability Problems
Many people switch to digital currencies because they can make payments instantly at a low price. But many individuals do not know that blockchain technology has a specific capacity for speedy transactions. While making multiple transactions, you can cross the limit. If the count goes beyond the limit, the transfer speed will slow.
But you can also speed up multiple transactions in a day by giving more money as transactional fees. You must visit coinmarketcal.com to speed up your transactions. But it can frustrate many investors as they expect blockchain technology to work better. Slow processing of transactions can delay your payments and make you stuck with your goals.
3. Price Volatility
The crypto market is quite volatile, and the price of any asset can fluctuate at any moment. Many investors consider this fact as an opportunity to invest profitably. But you should also consider the dark side of this factor. If you get high returns, you can also lose all your money at once. If your asset price fluctuates and does not rise, all your investments will go to waste.
Therefore, you must consider price volatility as both digital currencies’ light and dark sides. If you are planning to invest in virtual currencies, you must always analyze the market and look for the perfect opportunity to trade your assets correctly. You should also be prepared to lose money at any time because price fluctuation can happen without any idea.
4. Transaction Cost and Speed
After comparing digital currencies with fiat money, you might have observed that it is better to make crypto transactions as they are instant and cost-effective. When you need to transfer a significant amount, you expect to give no additional fees for the transaction.
But this statement is false. You can get any service only when you pay for it. No solution is there to save your money. But all your transactions will be safe and instant if you pay a small amount. You cannot consider blockchain technology as free for making transfers.
5. Government Regulations
No legal authority is involved in the crypto world. The best part is that you can make any transaction anonymously and do not need to share confidential details with anyone. A user does not need to follow any government regulations. But now, you must look at this factor’s dark side.
If there are no regulations, you cannot complain of theft to anyone. It is safe to make crypto transactions because of highly-secured blockchain technology. But lack of regulations can make the digital asset tangible. Many countries have legalized digital currencies, and many more are planning to do so. In many places, governments are also regulating this currency to control everything.
6. Reverse Transactions
When you use fiat money, you can transfer funds digitally. But if any transactions go wrong, you can contact your financial institution to reverse your transfers. Once you send the application or request the authority, you can either get a refund or your payment will be canceled. But this is not the case with cryptocurrencies.
It is another dark side of using digital currencies. You cannot attempt to reverse your transfers. Once you pay any amount to someone, you can only request the receiver to pay back your money. You must handle your crypto assets on any exchange platform, and you will not be entertained if you request a cancellation or refund. Therefore, you need to pay the amount carefully to a trustworthy receiver.
Knowing the light and dark sides of the crypto world is necessary before becoming a part of it. After knowing the benefits, many people attempt to invest in digital currencies, and they start trading them. But they do not know the dark side, which makes them lose all their funds.
You must go through all the factors that can affect your investment. Without knowledge or experience, you cannot survive long in the crypto industry. Therefore, it is mandatory to understand the crypto world in depth and strategize to overcome certain challenges. With time, you will gain experience and know how to deal with the issues.