Digital coins are taking the world by storm – all thousands of them. But like any other currency, fiat, or otherwise, there are crypto challenges that make or break its growth going forward.
With the expansion of blockchain technology, more and more investors all over the world are becoming aware and getting interested in all the advantages of trading cryptocurrencies.
But before you plunge deeper into an unknown market, here are some challenges of cryptocurrency you have to know about. And, it’s not the matasano crypto challenges, but the overall state and issues when dealing with bitcoins.
- High Volatility
By far, one of the obvious challenges of cryptocurrency is its high volatility. Despite the popularity of blockchain technology, the crypto market is still a small market, so even the smaller move can create a massive effect on crypto prices.
Another challenge, when it comes to digital coins, is its instability. While they are token that is backed by fiat currency, which minimizes its market volatility, they are few and far in between. Most digital coins in the crypto space are not backed by anything, which means they are less stable.
One of the ways on how to solve crypto challenges like this one is for traders and investors to dip into stablecoins, which are still digital coins but has a backing of fiat currency to make its price stable.
While crypto advocates often highlight the security and safety in using peer-to-peer digital currencies, it isn’t the same thing for all crypto ecosystem. News has been coming out about reported thefts, but exchanges denying any service attacks still don’t inspire 100% confidence in traders and investors.
Another one of the many crypto challenges is the math and the usability of the language of cryptocurrencies. Take Bitcoin, for example, while some proponents cite that its indivisibility is one of Bitcoin’s key strength, it’s the opposite for other people. Even if one Bitcoin reaches thousands to a hundred thousand dollars in value, the decimal places when dealing with Bitcoin quickly reaches the level that often gets crazy.