Disadvantages No 1: Scalability
Probably the biggest concerns with cryptocurrencies are the troubles with scaling that are posed. While the quantity of digital coins and adoption is growing rapidly, it is still dwarfed through the range of transactions that payment giant, VISA, processes each day. Additionally, the pace of a transaction is some other essential metric that cryptocurrencies cannot compete with on the identical degree as players like VISA and Mastercard until the infrastructure handing over these technologies is massively scaled. Such an evolution is complicated and challenging to do seamlessly. However, some have already proposed several solutions, which include lightning networks, sharding, and staking as options to overcome the scalability issue.
Disadvantages No 2: Cybersecurity issues
As a digital technology, cryptocurrencies will be subject to cybersecurity breaches, and can also fall into the arms of hackers. We have already seen proof of this, with more than one ICOs getting breached and costing investors hundreds of hundreds of thousands of bucks this summer season on my own (one of these attacks by itself resulted in the loss of $473 million). Mitigating this will require non-stop upkeep of security infrastructure, but we are already seeing many gamers dealing with this directly, and the use of improved cybersecurity measures that go beyond those used in the common banking industries.
Disadvantages No 3: Price volatility and lack of inherent value
Price volatility, tied to a lack in inherent value, is a primary problem, and one of the specifics that Buffet referred to particularly a few weeks in the past when he characterised the cryptocurrency ecosystem as a bubble. It is an important concern, but one which can be overcome via linking the cryptocurrency value immediately to tangible and intangible assets (as we have viewed some new players do with diamonds or electricity derivatives). Increased adoption additionally expand patron self belief and minimize this volatility.
Disadvantages No 4: Regulations
Buffet also touched on this hassle in his talk:
“It doesn’t make sense. This thing is no longer regulated. It’s not under control. It’s not underneath the supervision [of] any…United States Federal Reserve or any other central bank. I don’t consider in this entire issue at all. I think it’s going to implode.”
Even if we ideal the science and get rid of all the issues listed above, till the technology is adopted by means of federal governments and regulated, there will be increased risk in investing in this technology.
Other worries with the science are normally logistical in nature. For example, altering protocols, which becomes fundamental when the tech is being improved, can take pretty a lengthy time and interrupt the normal drift of operations.