What is Cryptocurrency? A Beginner's explanation Part II

   Col Jay

Posted on February 16, 2019 6:52 PM

In part I of my two part series on Cryptocurrency, i detailed my background as an older person, not well versed in technology and what I understood of the benefits and advantages of cryptocurrency. In this, Part II, of the series, i will list some disadvantages from the perspective of someone who is new to Cryptocurrencies.

In Part II of this series on “What Is Cryptocurrency”, we will deal with the disadvantages of Cryptocurrency.

Hopefully, this short introduction helps people who are coming from older generations or from less-technical backgrounds understand the concept of this revolutionary new way of sending and receiving money.

Disadvantages of Cryptocurrency over Conventional/Fiat Currency

  1.   Very few countries in the World have accorded Recognition to Cryptocurrency as legal tender, therefore, it is considered by the masses as risky.

(b)    In most of the World Economy, Black Money acts as parallel (hard cash) to existing govt money in circulation affecting Govts day to day functioning. Cryptocurrency’s circulation/transactions have become another challenge necessitating counter measures  by Govts to meet their responsibilities.

(c)    In the eventuality of Govts developing a matching or improved Cryptotechnology to make the existing one non-functional, even for a limited period, can have unimaginable repercussions not thought of so far. This situation cannot be  dismissed outrightly as success and circulation of Cryptocurrency may impinge on existence of many a Govt. Alternatively, the Govts may examine the proposal of G-20 Summit held recently in Argentina with regard to instituting regulatory measures for transactions through Cryptocurrency.

(d)   After successful trading with BTC, its appreciation of value and unexpected profit margins, a number of new Cryptocurrencies have been invented, being used for transactions and vying for competitiveness. in case uncontrolled mushrooming of Cryptocurrencies continues, sooner or later the public would start questioning the efficacy of Digital currency. Therefore, there is a need to evolve certain measures to counter the likely complications arising out of uncontrolled growth.

(e)   The Central Bank controlling the Global Economy by having a complete say in the printing of Conventional Currencies of almost all the Nations, barring a few exceptions, shall not allow success of Cryptocurrencies as these impose real threat to its hegemony and tight control over finances of Nations. To make Cryptocurrencies unattractive Central  Bank in all fairness should be inventing latest technology to prove Cryptocurrencies worthless, extremely risky and beyond redemption.

(f)   Volatility.   Many factors are keeping Cryptocurrency volatile i.e. lack  of intrinsic value, lack of institutional capital, speculation and implementation of regulations.


Futuristic Scenario.

Cryptocurrency will continue to have its ups and downs, however, it can be reasonably expected that Cryptocurrencies will receive patronage from Institutional Investors as more Govts are looking into regulation of Cryptocurrencies. 

Lack of security has been one of the biggest concerns of Investors/Traders. The fact is, Cryptocurrency Exchanges are not regulated. Attempts are in progress to regulate The Exchanges as per the G20 Summit in Argentina issuing directions for Instituting regulations Globally.


   Cryptocurrencies are a recent invention and have been used for selling/buying and transacting various fiat currencies and commodities in demand by public. The response to handling of Virtual Currencies has been guarded and limited during the last decade. It will take some more time for public to transact in the Virtual Currencies whole heartedly after examining Govts response, institution of Regulatory Measures and in depth evaluation of pros and cons of profits and Risks. So, majority of Investors/ Traders will prefer a Wait and See Approach.

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