What you should know about Coin and Token #004

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Hello crypto friends,

With a humble heart, I happily come before you all today to discuss on an issue of great importance in the cryptospace.

In one of our discussions we examined some advantages involved in making use of coins and you would agree with me that the use of coins much also posses dis-advantages.

Today, we shall examine some challenges accompanied with the use of cryptocurrency, please stay tuned.

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CHALLENGES INVOLVED WITH THE USE OF COINS

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• HIGH VOLATILITY:

One major dis-advantage of using cryptocurrency is it's high volatility nature.

The cryptomarket is very volatile and this implies that the market flunctuates very quickly over a short period of time.

The volatility nature of the market makes investment in cryptocurrency very risky, one minute you are in profit and the other minute you are in an unbearable loss.

A user can invest a thousand dollar in a coin and then the coin looses value drastically, which will leave such user in a very vulnerable state.

• LACK OF REGULATIONS:

Cryptocurrency operates on a blockchain technology which implies that it's operation is free from the intervention of the central authority.

Although this decentralized quality of cryptocurrency is attractive to many users but this does not dispute the fact that there are high risk of scams in the system.

This further implies that once a person is being scammed, there is no way to trace the identity of the scammer, as the blockchain operates with codes and addresses.

• TRANSACTION SPEED AND SCALABILITY:

In as much as cryptocurrency is known for its transaction speed, there are some cryptocurrencies that face the challenge of slow transaction speed.

Considering the blockchain trilemma, scalability and transaction speed is often times one of the challenges of the blockchain technology.

Using bitcoin for example, there are instances where bitcoin blockchain experience congestion due to high transaction demand, and this often leads to a slower transaction rate.

• ENVIRONMENTAL IMPACT:

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Another challenge being faced by the cryptomarket is the environmental effects it gives during it's mining processes.

Mining processes of major cryptocurrencies especially those related to POW mechanism often require a complex computational power and energy consumption, and this is harmful to the existence of humans.

These computational power is used to validate transactions and they are harmful to the environment.

• TECHNICAL COMPLEXITY

Another challenge associated with the use of cryptocurrency is it's complex nature, an average user finds it difficult to understand the operation of the blockchain without proper guidance from an expert.

And this challenge has limited many to accept the use of cryptocurrency in their financial activities.

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CONCLUSION

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In as much as there are challenges faced by the cryptomarket doesn't mean it will remain that way.

The cryptomarket is evolving and there are new innovations in its operation and there are solutions being provided to these challenges.

There are so many advantages of the use of cryptocurrency which we have discussed earlier.

I hope we all learn to accept the blockchain technology and the future of finance.