What Are The Disadvantages of Cryptocurrency?

Investing in cryptocurrency hump might look appealing and profitable but investors should also consider a few downsides to it.

Cryptocurrency claims to be an anonymous form of transaction, but they are actually pseudonymous which means they leave a digital trail that the Federal Bureau of Investigation can decode. So, there’s a possibility of interference from federal or government authorities to track the financial transactions of normal people.

On a blockchain, there is a constant risk of a 51% attack which means It is a situation when a miner or group of them gets more than 50% of the network’s mining hash rate control. While in control, an ill-natured group can reverse the transaction that is completed, pause the transaction in process, double spend coins, prevent new transactions from getting validation and much more.

Nevertheless, this attack is only a risk to recently hard-forked networks and new blockchains. The majority of blockchains work on the proof-of-work consensus mechanism. Network participants are required to use powerful ASIC computers and the right hash to make a block added to the network. Due to this, there is excessive power consumption and countries are taking majors to lower its impact on the environment.

The lack of key policies related to transactions serves as a major drawback of cryptocurrencies. The no refund or cancellation policy can be considered the default stance for transactions wrongly made across crypto wallets and each crypto stock exchange or app has its own rules.