With some 2,000 cryptocurrencies to choose from, 2018 has started frantically. The unprecedented volatility and high returns of these digital currencies have ushered in a new era in the transaction system. Is this reshaping the transactional system to suit the Internet age? Or is it just another speculative bubble that will burst? The pros and cons of cryptocurrencies are as follows:

Top 3 pros:

  • Direct transfers for instant settlements – Through disintermediation cryptocurrency contracts can be completed now or in the future for just a fraction of the expense and time of the traditional asset transfer.
  • High-return investments – Percentage yields in the thousands ignite the interest of investors.
  • Transparency – The open recorded ledger based on blockchain technology makes all exchanges observable by whomever, whenever.

Top 3 cons:

  • Excessive volatility – Violent short-term price swings limit cryptocurrencies’ use as a strong vehicle for businesses.
  • Financing illegal activities – Potential use for money laundering and illicit activities given the transaction cannot be traced.
  • Artificial inflation of prices – Trading bots can artificially cause price dips and surges, rapidly manipulating the market.

Like any instrument, blockchain technology can be used for good or bad. The first to avail themselves of this new technology were cryptocurrencies.

As one cryptocurrency founder warned in an interview, virtual coins are “clock bombs”. We’re seeing over-monetization as companies issue a virtual coin when the same tasks can be met by existing blockchains. People are blinded by money obtained quickly and cheaply.

Constantin Magdalina has eight years of experience at multinationals, both in Romania and abroad. He has a master’s in Marketing and Business Communication from the Academy of Economic Studies Bucharest. He is certified Lean Six Sigma and ITIL. Chartered Institute of Marketing certifications extended his business expertise and knowledge. In over four years working for a Big 4 company, he initiated and conducted studies analyzing different aspects of the business environment in Romania.

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