IS IT TOO EARLY TO ADOPT CRYPTOCURRENCY ?

Despite the fact that investing in cryptocurrency has become fashionable, there are a number of flaws that must be addressed.
This has prompted everyone to wonder if it is too early to invest in cryptocurrency.

On October 31st, 2020, Bitcoin will be twelve years old. The cryptocurrency has made news on a number of occasions, highlighting its unpredictability. Thousands of new cryptocurrencies have sprung up as a result of Bitcoin’s success.
While every tech enthusiast and investor is interested in cryptocurrencies, they have differing perspectives on them. While David Yermack, a professor at New York University’s Stern School of Business, believes that cryptocurrencies could eventually replace national currencies, Warren Buffett has criticized cryptocurrency’s vulnerabilities and insufficient security standards. So, who are we to believe?

WHY CRYPTOCURRENCIES ARE VULNERABLE?

1. High Volatility

Bitcoin’s price soared to $63,000 before plummeting to $40,000. Investors are hesitant to trust the ecosystem as a result of similar instances. Furthermore, even if they hold cryptocurrencies, many people have no idea how they work. As a result, forecasting the increase and decrease in the value of cryptocurrencies is extremely difficult. Another risk of cryptocurrency ownership is the emergence of new cryptocurrencies.

Cryptocurrency-based businesses might develop their own currency to generate buzz and attract investors. However, the price of the cryptocurrency drops following the investment, causing the investor to lose money. Similarly, hundreds of cryptocurrencies are created solely to defraud investors, and the currency finally dies. As a result, investing in cryptocurrencies becomes difficult for investors.

2. Low Scalability

When it comes to cryptocurrency risks, scalability is one of the most hotly disputed concerns. The infrastructure for cryptocurrencies is still in its infancy. To uncover the roots of the scalability problem, you must first comprehend the concept of the scalability trilemma.

According to the scaling trilemma, cryptocurrencies may only pick between speed, decentralization, and security. The most widely used cryptocurrencies, such as Bitcoin and Ethereum, have chosen decentralization and security as their primary goals. As a result, cryptocurrency transactions are excruciatingly slow. Bitcoin miners can only process 4 transactions per second, compared to giants like VISA, which can process 65,000 transactions per second. As a result, the poor transaction speed is a major factor impeding cryptocurrency adoption in the mainstream.

3. Absence of Regulations

Another significant concern is that cryptocurrencies are unregulated, making it even more difficult for novice investors to trust the system. In reality, many people are attracted to the concept of investing in cryptocurrencies due to the lack of strict regulation. To ensure that cryptocurrencies are utilized ethically and that the cryptocurrency market remains stable, some regulation is required. Strong laws are the only way to ensure that crypto currencies and tokens are generally accepted.

While some nations are enacting legislation to make cryptocurrency use safer and more efficient, others have outright outlawed them, and the remaining countries seem uninterested. Regulation would lessen cryptocurrency’s vulnerability and help blockchain’s adoption in mainstream applications.

4. Liquidation Issues

Every coin on the market is currently illiquid. As a result, selling any assets without altering the currency’s value is nearly difficult for investors. Before selling the currency, investors can lose hundreds of dollars.

5. Cybersecurity Concerns

Cryptocurrencies, contrary to common assumption, are vulnerable to cybersecurity breaches and hacks. For example, Trade.io, a Swiss blockchain firm, previously stated that crypto tokens worth over $8 million were taken from their cold wallet. Similarly, numerous ICOs have had security breaches and hacking, resulting in hundreds of millions of dollars in losses for investors.

Ransomware is another serious problem in this area. Hackers are encrypting data at various businesses and demanding a ransom in Bitcoin worth hundreds or thousands of dollars to recover the data. Nayana, a South Korean web hosting company, was forced to pay roughly $1 million in June 2017 to decrypt the data of almost 3400 customers kept on 150 servers.

POTENTIAL SOLUTIONS TO FURTHER DEVELOP CRYPTOCURRENCIES

This method will help to speed up transactions by increasing the rate at which transactions are processed collectively by the shards. Other coins and tokens can use similar strategies to overcome cryptocurrency’s scalability and vulnerability challenges.
The increase and fall in the value of cryptocurrencies must be controlled in order to overcome the issue of volatility. It’s critical to recognize that the demand for crypto coins and tokens is influenced by a variety of factors. As a result, a cryptocurrency initiative called Basis aims to maintain the value of cryptocurrencies by growing and diversifying their supply.

reducing the currency’s supply, much like central banks do. Other cryptocurrencies can use similar strategies to overcome the issue of volatility. Similarly, suitable actions can be implemented to address other cryptocurrency risks, such as those connected to cybersecurity. The greatest objective should be to hire better security divisions with competent cybersecurity professionals who can develop a safe authentication mechanism and establish web application security controls. Security officials must undertake frequent security training and audits of hardware and software. Furthermore, investors should avoid using cloud storage and storing private keys in a secure location.

CONCLUSION

Even if there are concerns about cryptocurrency’s vulnerabilities, it can be used by businesses in a variety of industries and sectors. Given that the underlying technology is only getting more advanced, big players have concluded that the benefits of cryptocurrencies exceed the constraints. As a result, industry behemoths like Virgin Galactic and Microsoft have already implemented cryptocurrency into their operations.

By following in their footsteps, any company can get a competitive advantage in the market by cautiously adopting blockchain and cryptocurrencies. However, business leaders, such as CTOs and CIOs, must be well-versed in all aspects of cryptocurrency in order to successfully integrate blockchain and cryptocurrencies. Furthermore, determining which problems may be solved using cryptocurrency is crucial for strategizing its effective implementation. Hiring a team with specialized expertise can help you get a lot more done in less time.

adoption, and to ensure that higher security standards are met. Before cryptocurrencies are implemented, it is critical to educate employees and explain how cryptocurrencies will impact the firm and work culture.
The weaknesses in cryptocurrencies will be addressed with additional advancements in blockchain technology. Cryptocurrencies have the potential to change finance, healthcare, technology, and a variety of other industry categories, according to finance and technology experts.