Cryptocurrency will dominate the financial market in 2021. Bitcoin is even compared to US Dollars, and predictions have been made that it might replace fiat currency in upcoming years. Cryptocurrencies are traded at a cryptocurrency exchange. These exchanges allow traders to exchange, buy and sell digital currency by providing different tools at lower prices. But as nothing in this world is perfect, cryptocurrency exchanges also have some disadvantages besides advantages. Let’s proceed to know some of these:
Pros of Cryptocurrency Exchanges
Here are the cons of crypto exchange:
- You can trade stocks of digital currencies on a relevant and welcoming platform.
- Payments execution, account logins, and financial details can be accessed through different apps or websites.
- One does not require to provide their identity details while working on decentralized exchanges, so the factor of anonymity is the plus point.
- Decentralized exchanges are more private and reliable as compared to a centralized exchanges.
- There are no fees while trading on decentralized crypto exchanges.
Cons of Cryptocurrency Exchanges
Here are the cons of crypto exchange:
- There are transaction charges at exchanging platforms to provide different services, features, and tools. Sometimes these charges are very high, but it varies.
- If a centralized exchange platform is hacked, there are significant losses as billions of Bitcoins are invested or traded here.
- Users need to remember the passwords of their accounts or wallets; otherwise, they can lose their assets forever. No forgotten data is recoverable on a decentralized crypto exchange.
- Liquidity can be low, sometimes making it difficult for traders to buy or sell cryptocurrencies. So they have to wait for some time.
- Decentralized exchanges do not allow the buy and sell of cryptocurrencies through fiat money, so it is essential to hold some crypto.
Final Verdict
Before starting on a cryptocurrency exchange platform, one should always do good research about factors like supported tokens, transaction fees, authenticity, and security.
As a writer, Johnny is an advocate of blockchain technology and cryptocurrency in general. He writes about all things from cryptography to economics, with a focus on how it applies to cryptocurrencies. He is also passionate about writing about topics such as decentralization, open-sourced software development, and copyright law.