The Biggest Problem With Crypto Currency, And How You Can Fix It

Introduction to Crypto Currency

Cryptocurrencies are digital currencies that are produced, preserved, and protected by robust cryptography. Because of this, it's very hard to hack or alter its transactions. A cryptocurrency is usually immune to censorship since it is not governed by a single entity, unlike other types of digital assets, such as the gold that is sold on exchanges, money used in online games, or exclusive virtual assets like loyalty points that are handled by the corporation. 

The old paradigm of currency, which was governed by central banks like the US Federal Reserve and created and issued by government monetary authority, is reversed by this.

What is the working mechanism behind cryptocurrency?

The distributed public ledger, or blockchain, on which cryptocurrencies are based is a record of every transaction that is updated and owned by currency holders.

Mining is the process of creating cryptocurrency units by using computer power to solve challenging mathematical problems that produce currencies. Users can also purchase the currencies via brokers, then use encrypted wallets to store and spend them.

You possess nothing physical if you hold cryptocurrency. To transfer a record or a unit of measurement from one individual to another without the assistance of a reliable third party, you need to possess a key.

What are the issues associated with cryptocurrency?

First drawback: Scalability

The scalability issues that are presented are likely the main worries regarding cryptocurrencies. The volume of transactions that payment behemoth VISA handles every day still dwarfs the number of digital currency and their fast popularity. Furthermore, until the infrastructure supporting these technologies is greatly expanded, cryptocurrencies cannot match the speed of transactions, another crucial statistic, of industry leaders like VISA and Mastercard. Making such a transition smoothly is challenging and complex. However, a number of alternatives have already been put out by some, including as sharding, staking, and lightning networks, as ways to get around the scalability problem.

Second drawback: Problems with cybersecurity

Since cryptocurrencies are digital technologies, they are vulnerable to cybersecurity lapses and could end up in the hands of hackers. This has already been demonstrated by the fact that several initial coin offerings (ICOs) were compromised this summer, costing investors hundreds of millions of dollars (one attack alone cost $473 million). Although ongoing maintenance of security infrastructure will be necessary to mitigate this, many participants are already addressing this head-on and utilising improved cybersecurity techniques that surpass those employed in the conventional banking sectors.

Third drawback: Price volatility and intrinsic value deficiency

Price volatility is a significant issue that is linked to a lack of intrinsic value. A few weeks ago, Buffet made reference to this issue particularly when he described the bitcoin ecosystem as a bubble. While it is a significant issue, it can be resolved by directly tying the value of cryptocurrencies to both physical and intangible assets (as some new players have done with energy derivatives or diamonds). As usage rises, consumer confidence should rise as well, reducing volatility.

Fourth Drawback: Rules

In his speech, Buffet also mentioned this issue:

"That's not logical. There are no regulations on this. It is out of control. Neither the US Federal Reserve nor any other central bank is in charge of it. I have absolutely no faith in this whole business. I believe it will implode.

Investing in this technology will be riskier until it is embraced by federal governments and regulated, even if we perfect it and eliminate all of the aforementioned issues.

The majority of other technology-related issues are logistical in nature. For instance, altering protocols, which are required when technology advances, can be time-consuming and disrupt regular business operations.

Solutions to the Difficulties Faced in Crypto Operations

Multiple-Level Transaction Management

We have developed a multi-level approved transaction management system in the AssetPro module of KryptoGO Studio to accommodate businesses of all sizes. We make sure that every transaction is carefully examined internally by decentralising operator permissions, which successfully avoids operational errors. In order to prevent abuse of power, managers can set transaction quotas for various authorisation roles in our system. This ensures that employees at all levels can only work within their authorised scope.

Assistance for Applications of Stablecoin

Stablecoins that are pegged to fiat currencies or backed by tangible assets provide more constant values in contrast to the volatility of cryptocurrencies. They are a priority for businesses, whether they are utilised as running cash or are later exchanged as investment instruments. By supporting a variety of stablecoins, our AssetPro and wallet applications enable businesses to manage their cryptocurrency assets directly through KryptoGO Studio and lower the risks associated with price fluctuation. Additionally, businesses can accomplish worldwide instant transactions without having to wait for TradFi processing time or pay exorbitant handling fees, increasing operational effectiveness and decreasing cash flow delays.

Detailed Tracking of Transaction Records

The system automatically logs every transaction's specific details, such as the time, amount, counterparty, and kind of transaction. These documents can also be compared to the outcomes of our Compliance module's risk assessment, which helps businesses with compliance management and financial auditing.

In summary:

Cryptocurrency has the potential to revolutionise the financial industry, but it is not without its difficulties. Extreme market volatility, security risks including hacking and frauds, a lack of regulation, and its application in illicit activities are the most urgent problems. Widespread acceptance is further hampered by the negative effects of cryptocurrency mining on the environment and the challenging learning curve for new users. These issues need to be resolved with improved technology, transparent legislation, and raised public knowledge in order to guarantee a safer and more secure future for digital currencies.