The Pros and Cons of Decentralized Currency

Decentralized currency in the form of Bitcoin and Litecoin has become increasingly popular because of it's already portrayed potential, as well as it's hugely untapped potential. While decentralized currency has only shown up in the past four years, it has already been adopted by a wide and massive audience. There are several reasons of supporting decentralized currency as an economist and a stakeholder in the economy, although there are some factors that have failed to prove such currency as exciting and/or useful. So why not compile some Pros and Cons?


  • Anonymity: The main reason why decentralized currency such as Bitcoin and Litecoin is popular among people is because of its inherent privacy. Such currency allows people to make The Face of Anonymous -- Le Hackers

    transactions while remaining totally anonymous. This means that if you purchase something online with the help of Bitcoins, there is little chance of that transaction being tracked. Decentralized currency makes transactions very similar to cash exchanges. This is different, however, from using a bank account where your private details are disclosed through the account number.

  • Supply: At the moment it seems like the supply of decentralized currency is abundant, but the supply will soon be limited This is because all decentralized currencies have a "limit" or "cap". It is inevitable that all the Bitcoins will eventually be mined. Once the supply is limited, the market of decentralized currency will work just like any other commodity.
  • Influence: Decentralized currency does not have influence of any authorities and its price is only derived by its users. This means no one central, national, or even international entity is in charge of currency. That is the meaning behind "decentralized". This internet currency is the first ever currency to be able to Funciton like this. No other currency before Bitcoin was created was decentralized. The value of all currencies that are not "internet currency" are determined some type of government or entity. Because of this, Bitcoin or any other decentralized internet currency cannot be manipulated for personal gain.


  • Might cease to exist: There is no way of finding out whether decentralized currency will exist in the future. This increases uncertainty over its future value. There are some people who have loaded up on Bitcoins in hope of profiting in future. In fact, people who have invested in Bitcoin at the very beginning (when Bitcoin was purchasable by the cents) have already made massive amounts of money. Not too long ago the value of Bitcoin was in the thousands--though that dropped and it currently rests at ~$500. The trend does show that decentralized currency will be used heavily in future, but if people eventually start to get bored of it and find it inconvenient, all the investors will face heavy losses.
  • Government intervention and alternatives: Since decentralized currency allows the parties involved in the transaction to remain anonymous, there is always a chance that government will intervene in this world to get some hidden information. Due to the inherent decentralized trait of this currency, governments do not have control over this currency because it is decentralized--which may spell terror for governments resulting in regulation. Moreover, the alternative of such currency is cash or credit cards and both are already widespread and equally feasible ways for payment.
  • Security issues: In order to use decentralized currency you need a wallet. If you lose such details you will lose all your investment and since it is just a virtual investment, your money will literally disappear into cyberspace. Other risks include hackers--if you are sloppy with the way you store your wallet, a hacker could easily gain control of your Bitcoin. If this happens, the anonymous and decentralized nature of Bitcoin backfires, because it is pretty much impossible to recover your money.


Decentralized currency is definitely an innovative idea which has opened doors to a competitive market for currencies. The system has been working great so far, and have earned widespread adoption among many vendors (Wordpress and Reddit among them). Nevertheless, there is no guarantee what value a certain decentralized currency will hold in the coming years. It does have a small role in a huge economy, but is it worth risking investing in a volatile market just for anonymity and privacy?

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Andrew Plaza

Nerdy Tech fanatic interested in the intricacies of life, technology, and high existence.

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