Cryptocurrency is going through an exceptionally incredible time – receiving immense interest and adoption by investors, real time users, media, traders, and so on. Here, traders are assisted with all the necessary facilities to trade, and use cryptocurrencies.
In one of our articles, we highlighted the benefits and advantages of adopting crypto – but there’s something you cannot take away from cryptocurrency – it’s down sides and real-life challenges.
In this article, we will discuss a few of cryptocurrency challenges and downsides.
The fraud challenge is definitely not peculiar to cryptocurrencies alone. Wherever you find money, scams and fraud must follow. Despite the transparency, crypto transactions are untraceable. This makes it almost impossible to get to the criminals.
Cryptocurrency fraud cases are also extremely difficult to solve because everyone on crypto is anonymous- that is why it is exceptionally important to always review your transactions thoroughly before hitting “send”. Rug pulls, Ponzi schemes, and phishing are now the order of the day in the digital ecosystem.
The high risk associated with the changes in value of cryptocurrencies is enormous.
Here’s the reason for the high and unhealthy risks:
In a decentralized digital ecosystem such as this, there is no governing body to regulate the set price of each currency, or commodity. This allows the crypto “sharks” and high volume-holding users to influence the market simply by selling or buying their assets.
The trade of cryptocurrencies is made possible after new coins are generated through mining. This is because mining enables the miners to solve complicated mathematical equations. In return, miners receive a specified amount of crypto coins.
Mining may seem like a reasonably simple phenomenon where you solve an algorithm and get the prize. However, the number of energy resources, mainly the electricity it uses, is insane. Moreover, the hardware costs alone are more than the prize earned.
The whole mining thing makes crypto unsustainable for the environment. This is a significant challenge faced by the market which needs to be tackled as soon as possible.
Crypto is the future of the digital world, agreed. The increasing popularity and demand for cryptocurrencies have expanded their usage.
The advantages of this expansion aside, unfortunately, the grounds of crypto have also expanded to the opposing side, which led to the formation of an opportunity for criminal activities like financial fraud.