Ticker

6/recent/ticker-posts

The disadvantages of Cryptocurrencies

 


A lot of time has been spent recommending this blockchain and cryptocurrency series. However, cryptocurrencies have a number of disadvantages that many have described (such as the Warrant Buffet, a well-known investor) as another “bubble”. It is therefore important to identify and understand potential problems and barriers to refusing to adopt these key technologies.

Issue no. 1: Scalability

Perhaps the biggest concern about cryptocurrencies is the scalability issues that have been raised. Although the number of digital coins and entries is growing rapidly, the number of transactions processed every day by the payment giant VISA is still declining. In addition, trading speed is another important metric with which cryptocurrencies cannot compete at the same level as players like VISA and Mastercard up to the infrastructure that these technologies are scalable. Such an evolution is complex and difficult to unravel. However, some have already suggested various solutions, including lightning networks, fragmentation and construction, as options to solve the scale problem.

 

Issue no. 2: Cyber   security issues

As digital technology, cryptocurrencies will be vulnerable to cyber security and may fall into the hands of hackers. We have already seen evidence of this: many ICOs went bankrupt this summer alone and cost investors hundreds of millions of dollars (one of these attacks was caused by $ 473 million). To reduce this, the security infrastructure needs to be constantly monitored, but we are already seeing that many players are tackling this directly and using advanced cyber security tools that go beyond those used in the traditional banking sector.

Issue no. 3: price vulnerabilities and lack of intrinsic value

Price volatility, coupled with a lack of intrinsic value, is a major issue, and one of the details that Buffett specifically mentioned a few weeks ago when he described the cryptocurrency ecosystem as a bubble. This is a major concern, but it can be overcome by linking the value of the crypto-currency directly to tangible and intangible assets (as we have seen, some new players are dealing with diamonds as energy products). Increased acceptance should increase consumer confidence and reduce this volatility.

 

Issue no. 4: Rules and Regulations

In his speech, Buffet addressed the following issue:

"It simply came to our notice then. This item is only regulated. He is out of control. It is not controlled by the US Federal Reserve as another central bank. I do not believe in all this. I think he will apply. "

Even if we implement the technology properly and get rid of these problems so that the technology is adopted and regulated by the federal government, investing in this technology will be riskier.

Other things related to this technology are in principle logical. For example, changing the protocols required to develop the technology can be time-consuming and prevent the normal flow of operations.

Summary:

With all the possible barriers to high acceptance, it makes sense that savvy investors like Warren Buffet choose to make a mistake on the safe side of this technology. And yet we know that cryptocurrencies (and blockchain technology) will be here. They offer too many of the benefits that consumers seek from today's money; distribution, transparency and flexibility are among the most important. Expanding the debate to what blockchain can achieve in many industries confirms this.

Author: 

  Arif Halili 

Post a Comment

0 Comments