Privacy

Under cash/credit systems, your entire transaction

history may become a reference document for the bank
or credit agency involved, each time you make a
transaction. At the simplest level, this might involve a
check on your account balances, to ensure that
sufficient funds are available. For more complex or
business-critical transactions, a more thorough
examination of your financial history might be required.

Another one of the great advantages of cryptocurrency

is that each transaction you make is a unique exchange
between two parties, the terms of which may be
negotiated and agreed in each case. What’s more, the
exchange of information is done on a “push” basis,
whereby you can transmit exactly what you wish to send
to the recipient – and nothing besides that.

This guards the privacy of your financial history and

protects you from the threat of account or identity theft
which is greater under the traditional system, where your
information may be exposed at any point in the
transaction chain.

Lower cost
You’ve no doubt read your monthly account statements
from the bank or credit card company, and balked at the
level of fees imposed for writing checks, transferring
funds, or breathing in the general direction of the finance
houses involved. Transaction fees can take a significant
bite out of your assets – especially if you’re performing a
lot of transactions in a month.
 Since the data miners (remote and separate computer
systems) that do the number crunching which generates
Bitcoin and other cryptocurrencies receive their
compensation from the cryptocurrency network involved,
transaction fees usually don’t apply.

There may be some external fees involved if you

engage the services of a third-party management
service to maintain your cryptocurrency wallet, but
another one of the advantages of cryptocurrency is that
they are still likely to be much less than the transaction
charges incurred by traditional financial systems.

Security
Once a cryptocurrency transfer has been authorized, it
can’t be reversed as in the case of the “charge-back”
transactions allowed by credit card companies. This is a
hedge against fraud which requires a specific agreement
to be made between a buyer and seller regarding
refunds in the event of a mistake or returns policy.

Finally, the strong encryption techniques employed

throughout the distributed ledger (blockchain) and
cryptocurrency transaction processes are a safeguard
against fraud and account tampering, and guarantors of
consumer privacy.

Speed
Purchasing real property typically involves a
number of third parties (Lawyers, Notary), delays,
and payment of fees. In many ways, the
bitcoin/cryptocurrency blockchain is like a “large
property rights database,” says Gallippi. Bitcoin
contracts can be designed and enforced to
eliminate or add third party approvals, reference
external facts, or be completed at a future date
or time for a fraction of the expense and time
required to complete traditional asset transfers.

No manuplation

Because cryptocurrencies are typically

designed in such a way that the amount of
coins produced are limited by an algorithm,
no single person, company or country can
control how much is produced. There can be
no manipulation of the money supply – a
common occurrence in the case of the U.S.
dollar, say, which is controlled by the Federal
Reserve. It is sometimes desirable to adjust
the money supply, of course; but when it is
done badly, it can lead to economic disaster.
Some economists have argued that the
monetary policies of a centralized system
helped trigger the economic crisis of 2007-
2008.

Acceptance

Demand for daily use is still relatively weak.

Limited awareness across the globe make
real currencies much better alternatives due
to their wider acceptance of use and
demand.

Volatility

The value can fluctuate quite dramatically

because of external factors, including
vulnerabilities in the security platform. That
unpredictability makes many people wary of
using crypto-coins as a medium of exchange.

Legal issues

Criminals are attracted to the decentralized

financial dealings and near-anonymous
transactions that are the hallmark of any
cryptocurrencies. By using digital money to
make purchases and sales or to move their
ill-gotten gains from place to place, they get
unintended protection for illicit and illegal
activities. In 2013, prosecutors shut down
Silk Road, an online site where users could
anonymously buy everything from forged
passports to narcotics, and which only
accepted bitcoin for payments.

Security issues

As transactions are not reversible, buyers

must put their complete trust in the
merchant, who in this case is the protected
party in the transaction. Given its digital
nature, cryptocurrencies are also subject to
cyber-attacks – several exchanges including
Mt Gox,

TradeHill Bitcoin and Bitcoinica exchange

have faced similar challenges, leading to
their downfall.

Regulations

Cryptocurrencies have restricted use in

countries including China, Japan, India and
Indonesia. More regulation will mean the cost
of using cryptocurrencies could rise.