Culture Hack

Culture Hack

The Cons of Crypto: What We Need to Keep in Mind as Digital Currency Expands

When explained simply, cryptocurrency seems to be the money of the future. It is unaffected by the fluctuations in worldwide currency, can be accessed through the internet (a place where most business and purchasing is done nowadays), and it seems as if major corporations are promoting its use. While this new form of money offers us a new beneficial way to exchange, there may be a few things to keep in mind when getting involved with crypto currency. 

The more people get involved with cryptocurrency, the faster we will find a more standard way of attaining, exchanging, and using them. Until then, however, there are a number of different security and stability concerns that go with investing in these digitized coins. Though they are not reflective of any international trade market, crypto is still pretty volatile. Because it is not a standard form of money, there are always unexpected occurrences in the market that often lead to swift changes in price. It’s common for values to descend by the hundreds — sometimes thousands — in dollar conversions. Another security issue is that there is no real regulation when it comes to crypto: up until now, governments and banks have no real authority on how they are used. 

There is also an issue with hacking in that technical glitches allow more room for people’s accounts to be drained. Those who are not familiar with the safety measures taken to secure tradings can fall victim to virtual extortion, market manipulation, and other forms of fraud. The education on how to protect your finances while getting involved with crypto should be taught to users of all skill levels so that the new currency can be a more widely accepted, more secure method. 

Aside from security risks, investors also face the problem of technological differences. Because every blockchain is different and not all forms of crypto follow the same structure, there is a lot of complexity when it comes to the use of currencies. Investing in a number of different currencies could be beneficial and expand one’s handle of the crypto. It does, however, pose the threat of confusing users to the point where they make the wrong moves during the wrong periods. Similarly, people may be eager to dedicate a large sum of money to crypto without understanding the tax implications to follow. Because the IRS counts virtual currencies as property, digital coins can be subject to capital gains taxes that some may not be expecting if they sell. 

In addition to the user risks, some studies have found that Bitcoin and other top cryptocurrencies are a lot more harmful towards the environment than once thought to be. The Digiconomist states that Bitcoin’s yearly energy consumption was up to 73.2 TWh in early 2020, its carbon footprint 34.76 megatonnes of carbon dioxide. As more comport actions invest in the expansion of crypto, there will likely be a call to energy regulation so that the money of the future will have a future to succeed in. 

Although cryptocurrency poses a few risks to those who want to invest, there is room for improvement. Through a bit more regulation, an increase in the education around digital coin, and a look into decreasing its energy consumption, cryptocurrency has the potential to become a main source of exchange.