The Risks And Rewards Of Crypto Only World

Hi guys, talking about cryptocurrency isn't my thing, but the truth is that we learn every day. When I saw today's prompt, I knew I was in for a bumpy ride lol. Thank God we learn every single day. I had to do my research and here I am talking about cryptocurrency. I'm not a financial advisor or crypto guru, so here we go.

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The topic of the world operating on cryptocurrency has been a subject of debate for years now. Some people say that such a world will offer more freedom, security, and mostly true ownership. Well, since it's a debate, some also say that this could lead to financial instability and inequality and might even cause chaos among people. The question today is can the world run on cryptocurrency alone without the use of our local currencies and banks? And moreover, is it a good thing or a bad thing?

Cryptocurrency provides a more decentralized financial system, e.g., Bitcoin, Ethereum,which are all powered by blockchain technology.
What is a blockchain?
Blockchain is a distributed ledger system that ensures transparency, security, and immutability without the need for central authority.
According to Meta AI

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Decentralization is the major advantage of cryptocurrency because with it, you wouldn't need to go to the bank, and there wouldn't be a need for high charges for every transaction made. Your account will not be frozen for any particular reason. In a world where cryptocurrency is used instead of fiat, every individual would have full control over their money, without any rules/ regulations from the government and banks. With cryptocurrency, transactions would be faster, cheaper, and seamless.

Now, the advantages of a cryptocurrency-only world are attractive, but some challenges must be addressed.

1. Scalability: The first issue here on my list is scalability. Some blockchain networks like Ethereum and Bitcoin still struggle with transaction speed and their high fees during periods of heavy usage. However, new technologies have offered solutions like the Lightning Network to improve scalability, but these technologies are still in their baby stage and just may not be able to handle a larger volume of transactions later in the future if cryptocurrency is used instead of fiat.

*2. Volatility of crypto: Unlike fiat currencies, which are stable and backed by central banks, cryptocurrencies are highly volatile. Just a single tweet from a high-profile person talking trash or good about certain crypto sends the value of the cryptocurrency plummeting or reaching its ATH. So I can still say it's not fully decentralized because they're people who have a large sum of crypto, and they're referred to as the whales, and these people influence the market obviously in their favor, we can also call them the decision makers, because whatever they say goes. This alone makes cryptocurrency unsuitable for everyday transactions. One minute, the market is up, and the next, it's crashing down. The truth is that with this, most businesses would be at a loss.

While blockchain offers transparency, we still have to talk about not having a single bit of privacy. Every transaction made is publicly recorded for everyone to see. Yes! It does provide accountability for every transaction made, but on the other hand, it exposes your financial activities to the public which is not safe. Since there's no privacy, this transparency can cause significant risks.
In conclusion, a world of crypto-only I see a future where there's no privacy, and when a particular currency you're holding goes down, you're officially broke and have to start from scratch again. The market is not stable, it's a very risky game.

I'm not a financial advisor 😁, but thanks for stopping by❤️