Some disadvantages of a cryptocurrency

Some disadvantages of a cryptocurrency – with introduction and all details

Who hasn’t heard of cryptocurrency? Cryptocurrency, also called digital currency, has been growing in the market recently. We can also see people discussing Bitcoin, Ethereum, Dogecoin, etc., on various social media sites like Twitter, Facebook, Instagram, etc.

Investing in cryptocurrency has always been a doubtful question, as we know that it is entirely in the virtual world and we still have limited resources to understand it deeply and make predictions to gain profit. Let us make cryptocurrency a bit easier for you. In this blog, we will discuss what cryptocurrency is, how it works and what its Advantages and disadvantages are.

What Is Cryptocurrency?

Cryptocurrency is a decentralized virtual currency based on blockchain technology secured using cryptography techniques. For knowing the one disadvantage of a cryptocurrency firstly we have to understand cryptocurrency better, one should be familiar with its three basic terminologies that are:-

  • Blockchain 

Blockchain is distributed ledger technology where digital assets are stored and recorded securely. Cryptocurrency uses blockchain technology to record transactions. Blockchain is called so because the data in this technology is stored in blocks with limited capacity; once the block is filled, it connects with a new partnership and forms a chain. Hence it’s called a blockchain

  • Cryptography 

As mentioned before, cryptography is used for security purposes in the cryptocurrency world.  Cryptography secures communication techniques between the sender and receiver.

  • Decentralization

The traditional currency system is based on a central system controlled by central government authorities. 

DInentralization in cryptocurrency means that no authority decides the rise and fall of a particular cryptocurrency. Hasralization has multiple benefits over the centralized currency system.

The primary purpose of cryptocurrency is to bring out an alternative to the traditional transaction system, which is not only faster and reliable but also transparent and easy to use. And cryptocurrency has also completed its purpose to a certain extent , as one doesn’t require to connect with any firm, like banks, credit card companies, etc., to use cryptocurrency. Further, blockchain’s immutability added the cherry on the cake.

As we are clear now, cryptocurrency, let’s slide into its advantages and disadvantages.

Some Advantages Of a Cryptocurrency

Cryptocurrency is seeking attention all over the world. Why? No doubt it’s because of its versatility and advantages. Here are five benefits of cryptocurrency.

  1. Protection from inflation

Sounds doubtful? Wait, we have a simple answer to it. Cryptocurrency is an independent money system which means that GDP, economy, any country’s financial state, or inflation rate can’t bring changes to it in any way. 

Furthermore, most cryptocurrency coins, like bitcoin, Ethereum, etc., have a limited supply. Hence, the value of each currency increases with the demand of the market rather than the supply. And this helps it to maintain its market value, preventing inflation.

  1. Decentralized

A significant advantage of cryptocurrency is that it is decentralized, which means no government or any personal authority has control over it. Various miners control many cryptocurrencies to develop them before releasing them into the market, but that doesn’t bring any changes in their nature.  

DHelpsralization helps in cryptocurrency’s maintenance, flow, and worth as any organization or authority doesn’t determine it, and this keeps it stable and secure compared to traditional currencies.

  1. Secure and private

Cryptocurrency is entirely in the digital world, and being concerned about its security and privacy is not only common but also a practical thought. Cryptocurrencies use blockchain technology which relies on mathematical calculations which are very hard to decode. And its immutability makes the validated information safe, secure, and permanent.  

Additionally, as mentioned before, cryptocurrency uses cryptography technology to keep the sender and receiver data private and encrypted, which makes the messages confident and non – repudiated.

  1. Easy transaction of funds

Cryptocurrency offers users fast and easy transaction money payment methods. But how? The answer is as there is no involvement of any third party during the transactions. Cryptocurrency is an independent currency. Hence, when you make any transaction, you don’t need a trustable third party like a bank or credit card company to complete the process. 

And these cryptocurrency transactions are done safely and quickly by the use of public keys and private keys given by digital wallets and using consensus protocol mechanisms like PoW (proof of work)  and PoS (proof of stake), depending on the cryptocurrency.

  1. Numerous currency options

Cryptocurrency is an intangible currency, and this prevents people from investing in it. However, Cryptocurrency has noted good growth in recent years worldwide as it can be converted and bought in fiat currencies, including the US dollar, Indian rupee, Japanese Yen, etc.

  1. Less or No cost mode of transaction

Cryptocurrency is considered the fastest and most preferable option to transfer money across various countries as cryptocurrency offers secured transactions and minimal or no transaction fees regardless of the distance between the receiver and the sender. This is possible because cryptocurrency doesn’t have many barriers and third parties like Visa, PayPal, or any bank.

Some Disadvantages Of a Cryptocurrency 

Enough of the glitters on cryptocurrency; now let’s check out its drawbacks. Cryptocurrency is yet a new concept. Hence it will take time to improve. Here are five disadvantages of a cryptocurrency that you can’t change but should always keep in mind.  

  1. Used for illegal transactions

Cryptocurrency is a decentralized network, and there are numerous transactions done every day. This makes it hard for government authorities to tap down any digital wallet. And cheaters take advantage of this to make illegal money transactions for illicit deals.

Besides this, many business people use cryptocurrency to hide their income from the government and income tax departments. This is a safe, simple, and quick way to get the money back.

  1. Risk of data loss

Cryptocurrency is a digital asset stored in your cloud-based digital wallet, which can be used on your mobile or laptop. But having a backup of your wallet is also essential. As life is inevitable, what if your phone gets stolen or you lose your computer? You may also end up losing all your digital assets.

  1. No refund or cancellation 

Transactions in cryptocurrency are permanent. Or in other words, once the transaction is made in cryptocurrency, you can neither get a refund nor cancel the transaction. And this is the worst drawback of cryptocurrency. 

And this becomes an invitation for scammers to utilize other money by pretending to be someone else, as the sender can’t retrieve the coins.

  1. High energy consumption

 Cryptocurrencies use PoW and PoS consensus protocol mechanisms to make the cryptocurrency data secure and recorded in blockchains. The PoW mechanism uses mathematical calculations that the miner must decode to validate the data. It takes time to do that and requires high energy consumption. The more people on the network, the more energy it needs.

  1. Security issue

Cryptocurrency has worked a lot to make it safe and secure from hackers. But still, there is a drawback, which is where the digital currency is stored, i.e., the digital wallet.

Most exchange stores save digital wallets in one place to recognize them easily. And that data can be hacked easily, and they can utilize the ids to hack, check and transfer your digital assets without much time.


If you were here with a question like “is cryptocurrency worth investing” then the answer entirely depends on your risk management. Cryptocurrencies’  advantages are worth replacing the traditional transaction system. But as it is yet a new concept, it can be manipulated and misunderstood and has few resources to understand its market. You have to be careful and aware before making any decision. 

However, research says that cryptocurrency is strengthening and improving its roots worldwide, and the trade count of famous Cryptocurrencies like bitcoin and Ethereum has been booming in recent years but there are Some disadvantages of a cryptocurrency. 

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