5 Threats to Cryptocurrency Dominance

Read on as we look at some of the best-known risks to cryptocurrencies becoming a replacement to fiat currency.

1. Open Access

By virtue of how the blockchain works, every subsequent block added to the chain must contain every previous block to maintain a legitimate recording of events. Otherwise, the security of the blockchain fails and it can no longer be trusted.

2. Environmental Footprint

Crypto miners – groups who employ sophisticated, energy intensive machines to solve complex algorithms in exchange for cryptocurrency – add new transactions to the blockchain. This system relies on a “Proof of Work” methodology, whereby crypto miners compete with ever-increasing computing power to solve the algorithm before others.

3. Key Person Risk

Cryptocurrency doesn’t have centralized control. It goes against the currency’s purpose and is largely a reason for its success. However, in recent years, Elon Musk has become wildly popular in the crypto community, and it sees him as its biggest booster.

4. Government Regulation

While governments might not have the power to ban cryptocurrencies outright, they can certainly ban their use cases. China recently signaled a warning about using virtual currencies as a form of payment.

5. Stable, State-Controlled Virtual Currencies

If you can’t beat them, join them. Governments have made numerous overtures at their displeasure with cryptocurrencies circumventing their hegemony. To this point, many of their concerted actions have failed to quell the crypto-mania we’ve seen in recent years.

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