Advantages and Disadvantages of Cryptocurrency

There is no denying that cryptocurrencies are slowly integrating into the World’s Economic Infrastructure. However, like any other investment, a level of unpredictability is hanging low on its tail.

The major advantages of cryptocurrencies include decentralisation, anonymity, security, and most importantly protection from inflation. On the other hand, the downside includes the use of cryptocurrency in illegal activities, lack of awareness, and its volatile nature.

Nevertheless, you cannot venture into crypto space with limited knowledge of the pros and cons. It’s wise to weigh all the positives and negatives before you bet on cryptocurrencies. This article aims to be your decision making guide as it covers all the major advantages and disadvantages of cryptocurrency.

Advantages of Cryptocurrency

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Protection from inflation

Most of the cryptocurrencies are hard-capped at a certain range. For instance, only 21 million Bitcoins will ever be issued. This practice ensures an increase in value as the demand surges thereby preventing inflation.

This also provides stability to cryptocurrencies and minimises volatility.

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Robust security

Unlike fiat currencies, cryptocurrencies cannot be counterfeited or double-spent. They are safeguarded with advanced cryptographic puzzles. Now, you know why these digital currencies are named ‘cryptocurrency’.

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Monopoly free and no third party involvement

Cryptocurrencies are decentralised and thus, not influenced by central authorities like banks or even governments. Cryptocurrency transactions aren’t managed by a sole authority either. It is regulated by thousands of nodes on the network. These nodes are rewarded with crypto incentives to maintain the integrity of the network.

Cryptocurrencies fuel peer-to-peer transactions. You don’t need to pay hefty transaction charges to third-party institutions like banks.

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Transparent and private

You must be wondering – How come something is transparent and private at the same time? The cryptocurrency network is asymmetric. This implies that anyone on the network can view your crypto transactions, however, they are virtually untraceable. This is made possible with public and private keys. Thus, cryptocurrency transactions are transparent and also provide anonymity to users.

cryptocurrency is 24/7

Fast transactions and 24-hour accessibility

Have you waited for wire transfers to reach your uncle abroad? Cryptocurrency effectively solves this issue. It doesn’t matter if you send cryptocurrency to your neighbors or in different corners of the world, crypto transactions are lightning-fast. For instance, Ethereum handles 15 transactions per second. Ripple, on the other hand, handles 1700 transactions per second. Some blockchains even claim to handle more than 50,000 transactions per second.

Ever rushed to the bank for some important purpose just to know it’s a public holiday? Cryptocurrency offers 24 hours of accessibility. You can send or receive crypto coins, whenever you want.

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Little to no transaction fees

Cryptocurrency transactions require minimal transaction fees. This is achieved by eliminating the huge walls of intermediaries like banks and other financial institutions.

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Easy to use

To use cryptocurrencies, you don’t need to fill different forms nor you need to be tech-savvy to use this digital currency.

To make transactions in crypto coins, you need a wallet and an internet connection. You can easily navigate the wallet’s software and make crypto transactions.

Ever thought it would be this easy to make transactions?

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Smooth exchange

Cryptocurrencies can easily change hands with most of the fiat currencies. You can also use crypto exchanges to trade your crypto coin against another. This easy exchange enables you to use cryptocurrencies at your convenience.

Disadvantages of Cryptocurrency

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Fuel for illegal activities

Criminals leverage the feature of anonymity to fuel their malicious activities. It’s impossible to trace the identity of the users making cryptocurrency transactions. This allows criminals anonymously to provide financial aid to activities like buying drugs, funding terrorists, money laundering, the dark web, and much more.

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No recovery

Where do you go if you lost your atm card? Banks, right? However, in the case of cryptocurrencies if you lose access to your private keys you cannot recover your crypto funds.

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Causing harm to the environment

Cryptocurrency mining is an energy-extensive process. It is estimated that cryptocurrency mining accounts for 0.2% of global electricity consumption. The good news is mining processes are slowly moving towards green energy sources.

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Exchanges are not secure

Storing your crypto funds at a safe and secure place is crucial. If you are still using crypto exchanges to store your crypto coins you must look at other resources. Past successful hacks have resulted in the loss of millions of dollars. This proves that cryptocurrency exchanges are susceptible to hacks.

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Irreversible transactions

Once a crypto transaction is initiated it cannot be reversed or refunded. This is a boon for scammers. If anyone lures you with some unimaginable offers, please stay away from them. Remember, if you send your crypto funds to these scammers there is no way to recover your funds.

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Lack of awareness

Cryptocurrencies are the talk of the town. However, it is also true that many people aren’t completely aware of this wonderful technology. This lack of awareness induces a sense of risk for crypto investments among people. This becomes a major hindrance to its mass-scale adoption.

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As discussed earlier, like any other investments or even currencies, cryptocurrencies also carry a degree of uncertainty. As cryptocurrency is currently not accepted by many governments, the volatility increases manifolds. However, if you are aware of the know-how of the crypto space you can earn huge profits.

illegal activities

Not legalised everywhere and have some scaling issues

Cryptocurrencies are not legalised in many countries whereas some countries have started embracing the technology. Also, cryptocurrency technology is still in its emerging phase thus, there are some scalability issues still waiting to be addressed.


The popularity of cryptocurrency is skyrocketing with companies like Microsoft, Starbucks, and many others embracing it. Cryptocurrency does have some uncertainty like any other emerging technology. Nevertheless, it is indeed a financial revolution changing the way money changes hands.

It's time to wear the analyzer's hat as you have read all the major advantages and disadvantages of cryptocurrencies.

Cryptocurrency is a hot trend to follow and maybe it is wise to invest in cryptocurrencies while the iron is still hot.