Cryptocurrencies Advantages and Disadvantages: A Review

Abstract

With the rapid spread of technology in life and the necessary need to increase the speed of payment processes, confidentiality, and privacy, cryptocurrencies appeared. A cryptocurrency is a virtual and intangible currency, in which transactions are made through the internet. These currencies are characterized by decentralization, transparency, and privacy. Because transactions are carried out through a cryptography process and depend on Blockchain technology it is highly protected. Blockchain generally is a distributed ledger or a decentralized database. The Blockchain architecture combines advanced cryptography, consensus mechanisms, and a complex system of incentives. In cryptocurrency, transactions are created, transferred, and verified through an integrated process called mining. Blockchain technology architecture has given cryptocurrencies many advantages and features that increase their strength and distinction from regular financial transactions such as decentralization, confidentiality, anonymity, very low fees, unrestricted by geography, transparency, protection from Inflation, and the peer-to-peer network. The misuse of powerful features in cryptocurrencies and Blockchain technology has led to many disadvantages such as the risks of lack of knowledge, the lack of wide acceptance, the high risk of investment, its volatile nature, and the inability to return missing payments. This study concentrates on cryptocurrencies in terms of advantages and disadvantages.