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Challenges of Cryptocurrency


The world of cryptocurrencies might be complex and incomprehensible to the common people. Since the advent of Bitcoin, a virtual currency also known as cryptocurrency, the majority of people have imagined an easy way to achieve their objective to make money. Crypto is a riskier investment; it provides the possibility of large gains but at a higher risk. It is not because they believe digital assets will replace traditional currencies and forever disrupt the financial world. Instead, people own cryptocurrency primarily to benefit from the purchasing and selling of cryptocurrency. This article is an attempt to discuss some challenges of cryptocurrency in the following paragraphs.

Crypto Disciplinary Feature

There are numerous aspects to consider when it comes to crypto blockchains and cryptocurrencies. Because of the multidisciplinary character of this industry, the normal individual is obliged to attempt to understand each component; each solution generates new issues. The voyage begins with the question, "What is Bitcoin?" but the explanations and solutions come from a wide range of economic disciplines such as computer science, finance, history, geopolitics, and many more.

Crypto Controlling aspects

Cryptocurrencies do not have centralized control. The lack of regulation and responsible central authority is one of the most important ethical concerns for governments and academics about cryptocurrencies. Cryptocurrency has generated financial difficulties for governments all around the world. It's one of the key reasons why several countries have banned it. There are a few nations (no more than 11) that recognize cryptocurrencies as legal, but they focus on the tax consequences. Many governments see cryptocurrency as a substantial source of tax evasion. Despite its use in the purchase of goods and services, Bitcoin is not currently governed by clear global legislation. Some nations allow Bitcoin use, while others, most notably China and Egypt, have made Bitcoin use illegal.

Recession Tolerance

Following a blistering hot 2021 for the cryptocurrency market, the combined value of more than 21,000 digital currencies decreased by $1.4 trillion, or nearly 64%, to $795 billion in 2022. As equities have entered a bear market and cryptocurrencies have failed to split from the stock market, this extraordinarily volatile asset class has taken a beating. As a result, crypto should be seen as having no resistance to the global recession. This element plainly disqualifies it as a "safe haven".

Environmental impact

According to a report published on April 12, 2022, by "Earth.Org" Bitcoin emits approximately 57 million tonnes of carbon dioxide (CO2) annually, roughly half a tonne of CO2 for each operation. Planting 300 million trees would be required to offset such massive emissions. Furthermore, according to a 2018 study published in Nature Global Change, the use of Bitcoin alone might push the world above the 2-degree warming threshold for climate catastrophe in 16 to 22 years.

Concerns about Crypto

Cryptocurrencies, unlike traditional assets such as gold or commodities, are widely regarded as speculative investments in the form of virtual currency and have a number of issues in trading cryptocurrency such as:
  1. The main concern of cryptocurrency trading is cybersecurity and price volatility. The unexpected crash of Terra Luna, which reduced it from hero to zero and caused a massive loss of billions of dollars to its owner/investor, is suspected to be a deliberate cyberattack.
  2. Crypto has no intrinsic value and its qualities are difficult to comprehend due to their transdisciplinary nature.
  3. In addition to the lack of a regulatory authority in crypto-trading, the anonymity feature makes it particularly appealing to criminals seeking to fund unlawful initiatives.
  4. Misappropriation of investment funds. FTX, one of the world's largest cryptocurrency exchanges, is an example of investor funds being misappropriated.
  5. If it is hacked or lost, it is permanently lost.
  6. There is no such protection accessible to bitcoin holders as there is to bank account holders.
  7. The loss of a password might result in the total loss of cryptocurrency holdings/investments.

Scams

Hard or soft Forks are common phenomenon terms in the crypto industry and are seen as a crucial component of crypto coins. Most people, however, have a blurred knowledge of what forks are and what they mean for cryptocurrency investment. Because of the nature of the crypto business, there are many scams. The founders of a project, wallet, exchange or investment plan steal money from customers. Propaganda, technical complexity, regulatory ambiguity, and apprentice investors searching for a quick buck all contribute to a fraud-friendly environment. The following are examples of well-known scams:
  • Double Dealing: Ponzi schemes are a sort of deceit in which investors are promised large returns and old investors are paid with new investors' money.
  • Forged hacks: A project is hacked by an accomplice who splits the profits with the project crew.
  • Forged wallets: Wallet software that allows the scammer to access private keys, so the coins can be stolen from the user.
  • Pump & Dump: Illiquid currencies are purchased cheaply by fraudsters, then publicized on social media and sold to new investors at a higher price.

Crypto Dream

Cryptocurrencies are money by definition, but not "tangible" money or state-backed money such as currency notes or coins. It all begins with a millionaire's desire paired with a crypto dream. As a matter of fact, one cannot be a millionaire or billionaire in one's native currency very easily, but one can be a millionaire or billionaire in cryptocurrency, for example, by purchasing and holding SHIBA INU for $1,000 or $10,000 and claiming to be a millionaire or billionaire beyond global boundaries in digital currency to satisfy one's psychological dream that it will one day be worth in million or billion dollars.

Views of Crypto Analysts

Once Cryptocurrency was formerly unknown except to a tiny group of individuals before fast becoming a household term. Analysts in this field project that the global cryptocurrency market will more than triple in value by 2030, with approximately $5 billion in transactions. Investors, businesses, and companies, whether they want to or not, cannot ignore the increasing wave of cryptocurrencies in the years to come. Confusion, on the other hand, appears to follow crypto everywhere. Investors support regulation but are afraid of many of its consequences. They are worried about the environment, yet cryptocurrency has significant carbon emissions.

Disclaimer: This post is not intended to provide investment advice or to discourage cryptocurrency traders.

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