Cryptocurrencies became very popular in recent years, and the main reason for that is that they represent a great way to earn profit from investing in them. The most popular digital currency is Bitcoin, which is currently valued at around 11,500 dollars. Also, there are many other cryptocurrencies with a huge market share, like Ethereum, Litecoin, XRP, and much more. Besides the chance to earn profit from investing in them, cryptocurrencies also represent a conventional and modern type of payment, which makes it much easier to process online payments and transfers when we compare it to standard bank accounts.
However, we are still waiting for regulations in most countries related to trading with these digital currencies and taxation of them. On the other hand, some states are trying to adapt their monetary systems and start using virtual assets in the same way as fiat currencies. For example, there are over 9000 ATMs throughout the world that has support for crypto. Also, high volatility makes them interesting for investors, since you can trade with them in a similar way as with stocks. If you are interested in trading with digital currencies, visit cryptosfuture.com.
Furthermore, besides the fact that many of these currencies have great potential, there are some downsides as well. The main issue is with regulations since we are still not sure whether most countries and the whole monetary system will ever accept crypto as a regular type of payment. There are also many other issues and challenges for blockchain-based currencies. Here are the major problems in the cryptocurrency market.
1. Transparency
When we compare virtual assets with standard fiat currencies, they indeed have much better transparency. However, the issue is related to the fact that around 20 biggest e-wallets hold over 80% of all coins, which harms their feature to be decentralized, unlike fiat currencies. The system will have to advance in a way where the crypto market will become and stay transparent and ethical, and where people would benefit from using this modern type of assets instead of traditional ones.
2. Trading Fees
One of the important benefits of using crypto for your transfers and payments is that there are no high fees as when we need to make a transfer over our bank accounts. However, since you need a crypto exchange to make a transfer or convert your coins, they also introduced some fees. The average fee in most exchanges is around 0.2%. However, the main issue is because most of them will charge both sender and the recipient with the same amount.
3. Price Fluctuation
Another problem with exchanges and crypto market is that there are no regulations that could affect them and stop them from various manipulations. The biggest issue is that some of them are using software to regulate the prices of some currencies in a way where they could gain a bigger profit. According to some researches, there are over $250 million in fake virtual currencies only in Korean exchange. Also, there are many indications that there are similar cases in exchanges all over the world.
4. Regulation
Even though cryptocurrencies have become a pretty popular concept in the last couple of years, we can still see that there are some loopholes and flaws when it comes to exchanges and other all other regulations. This cannot be credited to the fact that people are not aware of the particularities surrounding the concept itself. Instead, it should be said that governments are still resisting to implement this concept into their own regulation. So, this can be a pretty big problem sometimes.
5. Delays for Transaction
Even though all of us have heard that crypto transactions can be pretty fast, sometimes it can happen that some transactions can be delayed. When we say delayed, we mean really delayed like for a couple of days, which is way more than usual bank transactions. So, there is the question of creditability since cryptos market themselves as a method of payment that can be much faster than usual, bank transactions of fiat currencies. At the same time, there is a risk of hacking, which can have a negative influence on the transaction’s delays. But that is a story for a whole another time.
6. Liquidity
As you probably know, liquidity is the most important thing for every market, it doesn’t really matter about which market we are talking about. Without it, many different problems can arise over time. We are talking about problems like an imbalanced environment, which ultimately leads to the loss of every control you might have. In case the market doesn’t have proper liquidity, there is the danger of you having problems with making orders on time, and delayed execution, which can be a really unpleasant thing in some cases. Moreover, this can be a source of an unpleasant situation like manipulation of the prices you can see on the market itself. So, you should be perfectly aware of the problem when you are entering this market.
7. Decentralization
Since we are talking about cryptos, it should be said that there are some problems that need to be addressed. We are talking about decentralization. This concept is something every person has an interest in entering the market. The reason this is a really big thing is that every crypto is based on blockchain technology, which makes it possible for the decentralization we are talking about. Anyway, since this is a widely different concept than the ones we are used to, it needs to be clear what you can expect from it. Many people are caught in the difference between these two concepts, blockchain and the usual one, so we are pretty sure that not so many people understand it in a proper way.
In Conclusion
As you know, there are some risks with the whole concept of cryptos. Therefore, it is needed to understand some of these problems can be encountered along the way. Naturally, you need to be aware of them perfectly if you are interested in being a proper investor in one or many different cryptos.
