The Major Challenges Facing Cryptocurrency in 2021
Cryptocurrency has been a household name for the past decade, given the transformation that it has brought to the financial market. Although they created numerous opportunities and means of livelihoods for many, cryptocurrency networks still face many challenges to date.
These loopholes have put investors on the wrong footing on many occasions. However, investors can make money with cryptocurrency if they have adequate knowledge about how it works and how to overcome whatever challenges that may arise. Here are some of the challenges that the crypto ecosystem faces in 2021:
High Transaction Charges
Some networks such as Ethereum and Bitcoin charge relatively high fees to authorise users’ transactions. These fees serve as rewards to miners on the network who use their devices to process blocks of transactions.
Users who wish to process and complete their transactions swiftly have to pay these fees, thereby incurring more expenses for using a blockchain network. The transactions charges have made businesses hesitant towards accepting crypto as means of payment.
Therefore, developers need to find a way to fix this problem. Halving events have slashed transaction fees earned by miners over the years but more still needs to be done. Creating a faster network that requires fewer miners will considerably reduce the amount paid by users in order to process their payments.
Although cryptocurrencies have existed for a long time, a large percentage of people do not know what it is or how it operates. They sometimes believe it is a form of scam or ‘get rich quick scheme’, which has led them to make numerous costly mistakes.
Ignorant crypto users have fallen victim to scams and hacks performed by cybercriminals, thereby creating some friction in the industry. To solve this problem, investors, miners and other network users need to have an above-average knowledge about how cryptocurrencies function. This will help them to invest wisely and identify scam projects, preventing them from losing their hard-earned money.
Pump and Dump ICO Schemes
ICOs happen to be an integral part of the cryptocurrency market. Many assets have been accepted in the market through ICOs. People invest in these projects intending to earn returns when the prices start to go up.
The pump and dump schemes will continue hurting the cryptocurrency market because there are little or no regulations. When the coins are yet to enter the market, the developers of the token make heavy speculations about the coin in question.
Their actions spike the prices and attract investors. When they get enough investments in their coin, they cash out and leave their investors with coins that are worthless. These actions have constantly reduced trust in the cryptocurrency world.
The above-mentioned points are the challenges faced in the cryptocurrency market, and this threatens investment viability. It is imperative the developers and other stakeholders continue to devise new means of tackling these challenges. As the crypto market gets bigger and more advanced, it is expected that these issues will be resolved to allow a smooth flow of money within the space.