Since the beginning of cryptocurrency’s emergence, it has been surrounded by numerous controversies. Most critics consider it as a fad, and some even see it as a highly speculative asset.
As more and more people explore capitalising off the new digital currency, warnings also come out. This decentralised digital currency, although it has already existed for more than a decade, has always been bombarded with unending issues that have been subjects to arguments to this day.
This article will discuss and shed light on some common controversies about cryptocurrencies.
If you are not new to Bitcoin or another cryptocurrency, you must have known that in order to acquire digital coins in the most traditional sense, you have to first learn how to mine them.
Mining is not as easy as you thought it could be. It requires specialised computers and devices called ASIC, which stands for Application-Specific Integrated Circuit. These computers and devices serve as mining rigs that require a significant amount of energy and computing power.
Cryptocurrency utilises blockchain technology in order to make transactions safe and secure. However, the blockchain relies on encryption and consensus over distributed networks, meaning that in order to verify a transaction, complicated algorithms and mathematical puzzles must be solved using your devices. This process is distributed to millions of users around the globe. Imagine the number of computing power being consumed.
But the real problem relies on the power consumption of countries that use non-renewable sources of energy. This is one of the reasons why countries like China have banned cryptocurrency. China is known to use coal as a power source. Its ban on crypto mining led to 65% of the population of miners being kicked out of the industry.
Greener crypto mining has become one of the advocacies of miners worldwide. Miners who have been banned in their country have migrated to other countries that utilise renewable energy sources in order to mitigate the harmful effects of mining on the environment.
Also, gone are the days where miners used power consuming computers that require high wattage. Now, devices are designed to consume more reasonable amounts of energy. Plus, some blockchains adopted Proof-of-Stake protocols, which generally demand less electricity.
Note that you can also own cryptocurrencies without mining them.
You can get already-mined crypto on various platforms or websites. Registering with this platform, for example, allows you to connect with a broker and get access to numerous handy tools and information regarding the crypto market. This way you can invest without concerning yourself with mining hardware or high electricity bills, but remember that investment risks still apply.
Lack of Regulation
Cryptocurrencies run on decentralised peer-to-peer networks. Unlike fiat currency that is distributed by the government, crypto is not issued nor regulated by any central authorities or financial institutions. The problem with lack of regularity is the emergence of illegal activities like theft, scams or manipulation in the market.
For example, a crypto called Onecoin is one of the controversial ones, which turned out to be a Ponzi scheme dressed up as a cryptocurrency platform that stole millions from users and investors.
Also, cryptocurrencies that are accessed through online wallets give a person a higher chance to get scammed or be a subject of shady practices. Now, if anything like this happens, there is no central authority you can rely on.
As a fully decentralised digital currency, Bitcoin is notorious for its volatility. It can either make you or break you. While one moment you might be on the verge of celebrating its victorious all-time high, the next thing you know is that the price drops down again in a span of days or minutes.
Some investors, especially long-term ones, don’t mind these price fluctuations and may even take advantage of them, while small-time traders may be bothered by its instability.
No one can predict BTC’s price or what might possibly happen to crypto in the future. The only thing that is certain is its volatile nature. So if you are someone with a low risk tolerance, crypto investment may not be right for you.
Illegal Activity Ties
Most cybercriminals use cryptocurrency to camouflage their illegal activities. Gone are the days where criminals used the traditional payment methods in line with their illicit acts. Instead, they use cryptocurrency to remain anonymous.
Bitcoin is known to be a pseudonymous network, meaning users’ identities remain hidden, and they can only be identified through their network addresses. Given that technology can be manipulated, software applications can be used to hide even these addresses. If anything happens, it would be difficult for law enforcement to trace the people or groups behind these illegal activities.
The Bottom Line
As mentioned earlier, Bitcoin and cryptocurrencies are surrounded by never-ending controversies and issues that are yet to be resolved. For instance, there are environmental problems that need to be addressed.
Although decentralisation is advantageous for financial networks, the problem with it is that cybercriminals and criminal organisations take advantage of its pseudonymous nature. Until the ecosystem reaches the stage of maturity and issues are given resolution, then Bitcoin will remain a subject of scepticism and criticism.