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Are There Any Problems with Cryptocurrency?

False Decentralization

The issue of decentralization has been argued as a “false decentralization.” A large enough group of people verifying blockchain transactions does form a quasi-centralized entity. Those people are the miners, who validate the blocks in the public ledger and assign the blocks their unique codes, or hashes.

This argument is directly related to the 51% majority issue that plagues newer cryptocurrencies but becomes less of a problem over time.


Inefficiencies

Another issue that has been put forth is that the benefits of cryptocurrency either are not realistic or more efficient than traditional fiat currency.

An electronic transfer of funds for a real currency can occur in minutes. In contrast, many of the first cryptocurrency projects can take hours.

Some of the older crypto projects also require a lot of computational power, leading to high electrical consumption levels. Critics argue that this is an inefficient use of earth’s resources.

Recent developments have begun to work around the shortcomings of transaction times and energy consumption as add-ons to the established cryptos and new projects that do not contain the identified inefficiencies.


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