Blockchain technology has been praised for creating open markets and fighting corporate policies. Cryptocurrencies challenged traditional financial institutions offering better and more transparent transactions for users. Still, there are some downsides to digital coins that became apparent for the past couple of years. Investors have been buzzing that cryptocurrencies need more regulations implemented, even though creators of digital coins are firmly denying the proposition. However, they admitted having some problems with blockchains and are claiming that further decentralization will solve it. Here are some major problems with cryptocurrencies that users are complaining about.
As blockchain technology becomes more advanced and sophisticated, so do the hackers. Security has been the most worrisome aspect when it comes to trading and investing. More decentralization of the open markets has been offered as a solution to the problem, but many are not convinced. On the contrary. Investors are asking for a more regulated system that will ensure at least some degree of protection from the cyber-attacks. Creators and investors are at odds right now about how to protect currency exchanges, but they will need to find a common ground soon since cyber criminals are on the rise since 2018. As a matter of fact, exchange encountered 15 times more cybercriminal attacks in the past few years.
There have been many fake digital coins floating on the market looking for naïve users to scam them. This damaged the credibility of every legitimate cryptocurrency and justified critics’ stands. The most famous fraud was OneCoin when scammers caused damage of over $3 billion to the investors. The trust between creators and investors was at the all-time low, and many gave up completely from trading with crypto coins. Some speculators claim that almost 80% of all coins available are a scam. This is very harmful to the overall reputation of the major digital coins.
This became a major issue lately when it was revealed that 80% of all coins are in the wallets of 20 people and companies. Of course, just like in a traditional financial system, no one really knows exactly who they are beyond rumors. Transparency is urgent now more than ever with all frauds that plagued the crypto world in the past years. Still, creators and big investors are keeping such information under wraps leaving ordinary users to question and fueling gossips that it’s all a scam from the get-go. Small businesses are left with several coins here and there and the majority of coins are in the hands of a few powerful people, just like in a banking system that we all know. With the lack of transparency, accountability quickly vanishes. Trading and investing with blindfolded is not only a risk, it’s worse than gambling. So, not knowing who holds the coins, and if things go south there will be no institutions to file complaints, has put off many traders from investing.
Recently, the king of cryptocurrencies, Bitcoin, lost its liquidity for tens of millions of dollars, when its price took a dive on the market for more than $1,500 in minutes. This volatility is something that investors fear the most. Fluctuations of the prices are common for stock markets, but crypto exchanges have been notorious for major ups and downs. This environment leaves powerful investors with the doors wide open to manipulate the prices and availability of the coins. So, the whole decentralization talk becomes obsolete. Lack of liquidity and stability makes prices drop a lot and no one can predict it. To check out the latest movements on the market go to bitcointrend.app.
Anxiety over fraudulent coins caused creators and markets to delay transactions until the trader can confirm it. This is not something investors sighed up for originally. Speedy and much cheaper transfers were one of the reasons many companies, especially retailers, began accepting cryptocurrencies. These delays are beating the purpose of switching from regular bank transactions to crypto markets since in the end, it comes up with the same amount of time needed to complete the transfers.
Just last year Korean coins launched a bot that manipulated the supply and thus, prices of the coin once a week. The fraud was revealed quickly and stopped in time before any major damage occurred. This is just one of the examples of how investors lose trust in open markets, where there are no regulating bodies to protect them from scammers. Korean scam caused a ripple effect on every exchange market, not just the one in Asia. The seed of doubt was planted in every trader’s mind and the trend has been ongoing. Occurrences like this harm the whole idea behind free markets and currencies that are going to be available to everyone. Creators of the coins defend their stand by claiming that no market is bulletproof from cyber-attacks, which is true, but that goes against their original stance that cyber currencies are safe and secure.
Open markets have been accused of being unprofessional and unstable due to the lack of regulations. Many countries took some actions to make cryptocurrencies part of their rules and laws, like SEC in the United States. Many investors and supporters of the digital coins have been calling for more legislation that will protect them from criminals and hackers. Creators are firmly against it saying that will beat the purpose of the whole idea of open markets. For now, they are on the opposite sides and the resolution is not even on sight. In the meantime, regular folks are left to fight the storm of cybercriminals and fake coins by themselves.
The idea about the currency that is free of any laws and regulations worked a decade ago when there were a few coins available and the market was pretty simple to follow. Today, many saw the opportunity to cash in by dealing with fake digital money and scamming people. On the other hand, users have to bear part of the responsibility also. Many thought that entering open market investing in crypto coins is the easy way to make millions overnight. The problem is, cybercriminals came up with the same idea.