The Pros and Cons of Digital Currencies

It’s no secret that cryptocurrencies are more popular than ever before. Millennials, in particular, have championed digital currencies like Bitcoin more than any other generation, with a staggering 49% of those polled in a recent survey claiming to have bought cryptocurrencies, and 53% likely to use them to purchase goods and services if given the option.

So what are the pros and cons of using cryptocurrencies as a payment method, rather than simply holding them as a trading asset?

In this article, we spoke to Dmitrij Sheninsh, Business Development Executive at ECOMMPAY — a leading international payment service provider with its own fintech ecosystem, to get a clearer picture.

The Pros of Cryptocurrencies

Accessibility

Dimitrij notes that cryptocurrencies are now more accessible than ever, and are no longer the preserve of tech enthusiasts and silicon valley investors.

“More brokers now offer cryptocurrencies, and as they become more mainstream, they can be used to buy a growing range of products and services. Travel, electronics, luxury watches, and even cars are among the items purchased using currencies like Bitcoin.” — Dmitrij Sheninsh.

No Credit Limits or Caps

Many services bought using cryptocurrencies are expensive, including private jet and yacht charters. When making these kinds of purchases using regular credit or debit cards, payments sometimes need to be split into several smaller transactions to overcome the low limits of some banks, which, as Dmitrij explains, can cause issues.

“Splitting payments of several thousand euro transactions into multiple payments often triggers anti-fraud systems, which can prevent funds from going through. With cryptocurrencies, those issues are eliminated, as there are no caps or limits when working with digital currencies.”

Fast Transfers with No Time Limits

Paying by cryptocurrency has become increasingly fast. On average, a Bitcoin transaction takes under 5 minutes to go through, and will almost certainly reduce even further as crypto becomes more mainstream.

“There’s no time limit on a crypto payment which makes digital currencies ideal for making last-minute travel bookings, plus there are no interferences during bank holidays or weekends. Crypto can be transferred very quickly, at any time, on any day.”

User Anonymity and Transparency

In a broad sense, cryptocurrencies are an entirely anonymous payment method. Direct peer-to-peer transactions mean that the only parties involved in a transfer are the sender and receiver, with no interference from third parties.

“It’s possible to hold a crypto address without it being tied to your identity. Theoretically, someone could hold multiple addresses without any information linking them together. While there are certainly some complex discussions about the true anonymity of crypto, it’s far more private than a regular bank account or transaction.”

As well as being a very secure and private way of moving funds, cryptocurrencies offer a transparent and easily traceable audit trail, with the individual “blocks” of transactions that make up a blockchain acting as a record.

Less Expensive Transfer Fees

Bank card transactions can be expensive, especially when it comes to international transactions. Some crypto exchanges charge as little as 1% in fees, and international transfers typically won’t incur costs, as they aren’t tied to specific countries or banks.

The Cons of Cryptocurrencies

Although there are plenty of great reasons to adopt cryptocurrencies, we were keen to get Dmitrij’s take on the potential downsides. Here are some of the expert’s views on the potential cons of cryptos as a mainstream payment method:

Risk of Devaluation

It’s no secret that cryptos are volatile. The market can reach crazy highs and crash to all-time lows in mere days, making holding certain currencies risky, especially if you plan on using them for everyday purchases.

Irreversible Transactions

Since Bitcoin transactions are largely anonymous and unregulated, little can be done if a large amount of money is sent to the wrong person, for example.

No Government Regulation

Crypto enthusiasts are quick to point out the benefits of the decentralized nature of digital currencies. However, without government regulation, there’s no guarantee of a minimum valuation, and some experts believe that the markets will never stabilize without some form of official backing. In addition, the lack of regulation means scams and fraud are rife the further a user drifts from the mainstream.

Security Vulnerabilities

As a crypto owner, you could easily lose the private key that lets you access your coins, and with it, your entire portfolio. It can be challenging for newcomers to understand the nuances of crypto and the steps to keeping your wallet and transactions safe.

In Conclusion

We won’t give you any advice on whether to invest in crypto or not, but hopefully, Dmitrij’s thoughts have given you a better understanding of crypto’s pros and cons, helping you make the right decision for yourself.