What makes up web3? Crypto Pros & Cons of Cryptocurrencies

Pros & Cons of Cryptocurrencies

There are several reasons why people are interested in cryptocurrencies, and we’ve briefly touched on them along the way already.

Some are drawn to the potential high returns from holding them as a store of value or being able to host other technical functions and capabilities they offer, like smart contracts on decentralized applications.

Others are attracted to their decentralized nature and transparent nature as a public ledger, which can be particularly appealing for countries with a history of political and economic instability.

But cryptocurrencies also have many limitations that you should be aware of, and it’s important to weigh the risks and limitations on your own. The obvious one here is volatility. For example, if you held 1 bitcoin (BTC) on December 4th, 2021, it was worth around USD $49,105. But one year later (December 4th, 2022), that same 1 bitcoin (BTC) was worth only US $16,953. Many factors contribute to these fluctuations, including a mix of high-profile positive or negative cases and ambiguous regulations that can impact the market.

📰 One recent example is the FTX insolvency, which adds complexity to web3's market conditions. 😵‍💫

Another limitation is the limited adoption of cryptos, and not many businesses are open to using them as a medium of exchange in many parts of the world in the same way as your credit card.

So, as you get into the world of blockchain and cryptocurrencies, always do your best to weigh the risks with the aspects that appeal to you.

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