Pros And Cons: Should You Use Digital Money?
Even though digital currencies have been circulating nowadays, but actually there are still a lot of people contemplating about it. Before purchasing it, make sure you have understand what is digital money. If you are still contemplating to own or not, you can try to read the pros and cons of digital money for your extra consideration. Check this out!
Pros of Having Digital Money
A lot of people buy digital currencies because of its benefits. They said that digital money has higher value that physical cash, and some even mentioned it is a good investment. But for you who are still new in it, make sure to know the advantages of digital money before really having it.
1. Cheaper International Transfers
International currency transactions are very expensive and sometimes it’s a hassle to convert each country’s currency. Additionally, it’s common to pay fees while doing transactions abroad. Digital money can be used anytime and anywhere you like and frequently with no extra fees.
2. Full Access
Existing money transfers often take more time for transactions due to weekends and outside normal business hours. Because banks are closed and usually can’t confirm transactions in certain hours. With digital currency, transactions work at the same speed 24 hours a day, so you have full access to it.
3. Faster Transactions
Transactions made using digital currencies can be completed far more quickly than those made through conventional banking institutions. For instance, using a traditional bank to send money overseas might often take days for the recipient’s account to receive the funds, while using digital currencies can be done faster and sometimes even an instant transactions.
4. Support Unbanked
Another point to take note is digital money support people who do not have bank. If you don’t know, there are actually a lot of people who still do not have bank accounts. Which cause them to pay costly fees to cash their paychecks and send payments to others through money orders or remittances. If the country launched a CBDC, unbanked individuals could access their money and pay their bills without extra charges.
5. No Fees
Despite the fact that the funds in your account are technically yours, banks still need to make a profit by charging you the likes of ATM fees, transfer fees, and closing fees. On the other hand, digital currencies are technically all yours and you do not have to pay any charging fees to own it.
Cons of Having Digital Money
Now you have known the benefits of digital money, but how about the negative side of it? It is important to know about the disadvantages of it so you are aware of the potential risks.
1. Price Volatility
The majority of digital currencies are decentralized, means they are not supported by a government or central bank. They can lose or gain value quickly since they are not stable and are exposed to a great deal of volatility. Digital currency traders may have assets that are worth a lot, but if the value drops, they may quickly lose value.
2. A Lot of Options
There are several digital currencies with different blockchains that all have their own limitations. It will take time to determine which digital currencies may be appropriate for certain use cases. You have to research it properly one by one to choose which one is the best option.
3. Security Issues
Digital money is prone to hacking. Especially when its own form is in digital. Although digital money eliminates the need for physical safekeeping, its technological roots make it vulnerable to theft from digital wallets by hackers. Large-scale hacks of digital currency even have the ability to take down a nation’s financial system and endanger its national security.
There have been a number of cases of companies holding currency having it stolen in an attack. Traditional currency could be hacked too, but at least you will get compensation from the authorized bank if that happens. While digital currencies risks are all yours, so you have a chance to lose it all.
4. Lack of Regulations
The established financial industry is heavily regulated, which helps to add stability and ensure there is no unacceptable activity. While digital money is more ‘free’ but they are prone to unethical practices.
5. Uncertainty for Future
Digital currency is still new and very much in the early phases of growth, in contrast to traditional modes of payment that have endured and appear for a long time. The future is so unpredictable, and there is no assurance that the digital currencies you already have will remain useable or retain its value.
Are You Going To Buy Digital Money?
After understanding pros and cons of digital money, what do you think? It is important to consider both advantages and disadvantages wisely before really buying it. Remember to plan your financial strategically and see whether it is a right decision to buy digital currencies. Also make sure to read about types of digital money to know which one to purchase. Hope this helps!
