Cryptocurrencies offer very fast transactions that are far superior than any banking transactions. There are two criteria in analyzing transaction speeds for a given cryptocurrency. One is the time it takes to get from one wallet to the other — the confirmation time. And the other is the amount of transactions per second (tps), which is a key figure in determining the scalability of a particular cryptocurrency.
No Restrictions on Payments
It is the most noticeable advantage of cryptocurrency. There ares no restriction on transactions. Users can send currency anytime and anywhere.
Cryptocurrency transactions are entirely anonymous and it is not possible to identify who had done a transaction or with whom a transaction was made. The participants will be using only the network address of the sender and receiver. No identity of the corresponding participants will be published in the shared ledger.
Less to No Transaction Fees
Cryptocurrency transactions are usually free or at least fees are much less than present financial transaction charges. Bitcoin for example doesn’t charge transaction fees. But sometimes user have the option to offer transaction fees in order to speed up their transaction.
Cryptocurrencies are one of the most secure currency exchange systems available today. They have an ‘immutable’ property; payments are irreversible. So, chances of fraudulent transactions are very low.
Demonetization by Governments
Most cryptocurrencies work as a decentralized system and its exchange rate is fixed dynamically according to demand and supply factors. No government regulation can stop or influence transactions executed via cryptocurrencies. The only thing that a government can do is restring the conversion of cryptocurrency to a normal currency.
Secure Payment Information
Cryptocurrencies don’t need any user identity. They only use the wallet address of the sender and receiver, all other information is securely hashed and no one can retrieve it back. Just the particular amount of bitcoin will be transferred from one account to another.
|Lack of Knowledge|
People end up investing in cryptocurrencies without proper background knowledge and thereby unnecessarily losing money. It is important to understand that the technology in use is complex in nature. The use of such means of payments requires a thorough understanding before making any investment.
Even though the demand for cryptocurrencies is steadily increasing, they still haven’t established the same consumer acceptance as money yet. For this reason, the usage is very limited to only very specific domains.
This can be considered either as an advantage or disadvantage. Although there is a strict demand supply rule to define the exchange rate of cryptocurrencies, present market trends indicate an uncommon surge in the exchange rate of cryptocurrencies, especially that of Bitcoin. But it is believed that soon it will attain the normal pace.
Possible Ban by Governments
As before mentioned governments can’t control transactions via cryptocurrencies, but they have the power to ban or illegalize such. Surely, this casts some shadow on ambitious, unfettered movements. Nonetheless, the basic idea of cryptocurrencies as such can’t be banned by governments. Lately, some news indicate that governments may even go along with these type of transactions for their own benefit.
Vulnerability to Deflation
Cryptocurrencies are generally limited in number and their exchange rate fully depends on supply and demand. As there are only a fixed number of currencies in possession, the possibilities of deflation are way greater than in any other financial system, i.e. if someone holds bitcoins for a longer period of time, this significantly reduces the supply rate. The higher demand in such a scenario and reduced supply, can sometimes lead to deflation.
Impossibility to Reverse a Payment
Cryptocurrency payments mistakenly executed by someone are not reversable which could be a significant drawback. Once a transaction has taken place, it is statutory. There’s still no chance to cancel any transaction because of its permanency.
No Option for Key Recovery
Since most cryptocurrencies don’t possess a central regulatory authority, every individual is hence responsible for keeping their account safe and private. In case of losing the wallet key, there’s no way in retrieving back.