The Pros and Cons of Cryptocurrency

One of the primary benefits of blockchain-based cryptocurrencies are their decentralized design, meaning control is shared across a network of computers rather than through a central authority. This can allow for peer-to-peer transactions, as well as other potential benefits, such as faster and cheaper transactions and global payments, as well as increased financial inclusion for some.

It’s also important for crypto users to understand the risks associated with crypto assets, including their high price volatility, relatively short history, and evolving regulations. Let’s look at some of the advantages and potential disadvantages of cryptocurrency.

An Overview of Cryptocurrency

Cryptocurrency is a type of digital currency that was created and designed to be used independently of any central agency or owner. It’s decentralized, meaning it operates on a peer-to-peer network. It doesn’t need to be issued by a financial institution or government agency, although it may be in some cases.

Cryptocurrencies are powered by blockchain technology, which is something of a foundational technology on which cryptocurrencies exist. Blockchain itself is more or less a distributed ledger that acts as a record-keeper for transactions, and that is likewise duplicated and spread across computers around the world.

Its distributed, or decentralized, design is largely what gives the blockchain network transparency. If one person makes a change to the ledger, all of the other distributed copies will note the discrepancy. The data on each “block” is also validated by users on the network. That is typically done via “mining” or “staking” methods.

Broadly, cryptocurrency transactions are done through peer-to-peer transfers, typically without the need of a third party. The record of those transactions is then stored on the blockchain, and the data or information validated by the network.

As noted, privacy and transparency are key features of cryptocurrencies, though the specific levels of each depend on the specific blockchain or cryptocurrency in question. Blockchain networks’ decentralized nature simultaneously gives crypto holders and users a level of privacy (they may not be publicly identifiable based on the information on the blockchain) and transparency (via verified transaction history viewable on public blockchains).

Main Advantages of Cryptocurrency

There are some clear advantages to cryptocurrency.

Decentralization and User Control

One of the benefits of crypto is that it can be used to make payments or exchange value between two parties. This can be done independently of any third-party, making the transaction about as straightforward as it can get. It’s similar to handing a dollar bill to a friend on the street.

Protection Against Inflation

It’s possible that some cryptocurrencies may be used as a potential buffer against inflation. Because monetary inflation can occur when central banks and governments print more money (increasing the supply), things that are more scarce tend to appreciate in value. Mineable cryptocurrencies could be an example of that. The Bitcoin protocol, for example, is designed to keep Bitcoins relatively scarce regardless of what happens with monetary policy.

Recommended: Bitcoin Price History: 2009 – 2025

24/7 Market Access and Global Reach

Cryptocurrencies can be bought or sold at any time, day or night. Every day of the year. Stock markets, like the New York Stock Exchange (NYSE), are only open on weekdays during the regular business hours of 9:30am to 4:30pm ET. During nights, weekends, and on holidays, most traditional financial markets are not open for business.

Some of the only things that could interrupt a person’s ability to buy or sell cryptocurrency would be a power outage, internet outage, or centralized exchange outage.

Security and Privacy

As noted, because cryptocurrencies are rooted in cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment. As such, the relative security of cryptos may be one of the biggest benefits for users.

Crypto security, in large part, is determined by hash rate. The higher the hash rate, the more computing power is required to compromise the network. Bitcoin is generally considered to be the most secure cryptocurrency, as it tends to have a higher hash rate than other networks.

Note, though, that using a crypto exchange is only as secure as the exchange itself. Many incidents of crypto hacking involve exchanges or wallets being hacked or users becoming victim to crypto scams, such as phishing scams.

Accessibility and Financial Inclusion

Some of the benefits of cryptocurrency extend to people who don’t have access to the traditional financial system. Due to its decentralized nature, one of the benefits of cryptocurrency is that nearly anyone with access to the network can participate in that system.

There are millions of people today who are “unbanked” or “underbanked,” meaning they have little to no access to the traditional financial system. With crypto, however, the only thing those people theoretically need to make transactions is a smartphone. (Though it’s worth noting that Bitcoin mining is banned in China, and that there may be other local rules and regulations to take note of.)

Lower Transaction Costs and Fast Transfers

Crypto transactions can be made easily, generally at a low cost, and in a relatively private manner. Using a smartphone app, hardware wallet, or exchange wallet, almost anyone can send and receive a variety of cryptocurrencies.

Some types of cryptocurrencies can be purchased with cash at a Bitcoin ATM. A bank account isn’t always required to use crypto, so it’s possible that someone could buy Bitcoin at an ATM using cash, then send those coins to their digital wallet or phone. This may be a huge advantage for people who might lack access to the traditional financial system.

Easier Global Transactions

Cryptocurrencies have no sense of national borders. An individual in one country may send coins to someone in a different country, typically without any added difficulty. With some traditional services, getting funds across international borders may take a long time and come with hefty fees. Cryptocurrency may allow users to engage in peer-to-peer transactions from anywhere in the world.

Transparency Through Blockchain

Privacy can be a benefit of cryptocurrency, but crypto isn’t always as private as some people might think. Blockchains create a public ledger that records all transactions forever. The fact that it’s public is what helps ensure transactions are secure, since any changes to the blockchain need to be verified by the broader network. While this ledger only shows wallet addresses, if an observer can connect a user’s identity to a specific wallet, then tracking transactions becomes possible.

Most crypto transactions are considered pseudonymous because of this factor. It’s worth noting, however, that there are ways to minimize the chance of a wallet owner’s identity being revealed. Crypto users may put their assets in multiple wallets, for example, rather than one, and Bitcoin notes that Bitcoin addresses should only be used once.^[1]

Advantages of Cryptocurrency Mining and Staking

Cryptocurrencies utilize “mining” or “staking” to validate their respective blockchain networks and produce new coins or tokens, and that may provide some benefits to participants. For one, those processes help ensure that a blockchain network remains viable and secure. Mining and staking also create economic opportunities for participants in that they may earn rewards.

Further, some cryptocurrency projects take measures to become more efficient or resource-intensive.

One example: “The Merge,” which involved Ethereum moving from a proof-of-work model to a proof-of-stake model, effectively ending mining operations, and instead, adopting a much more efficient operating model. The ability of cryptos to change things up in a big way, and on a widespread, operating level, means that it has another advantage over traditional systems.

Key Disadvantages and Risks of Cryptocurrency

There are benefits to crypto, but there are also some potential drawbacks to consider.

Extreme Price Volatility

Crypto values change fast. That may make some holders uncomfortable, especially if they hope to use crypto as a store of value, or to make a purchase.

Your purchasing power could evaporate in hours, or even minutes, in some instances. Though it could also increase, too. It’s extremely volatile, and that’s the point.

So, while the industry as a whole has seen incredible growth over the past decade, it’s important to keep in mind that markets ebb and flow.

Learning Curve for Beginners

Given that crypto is an evolving space, there can be a steep learning curve for beginners, though that may change as more financial institutions adopt crypto services.

The crypto industry is reliant on many technologies and different types of blockchain services to function. Those technologies often aren’t intuitive, and may require some background research to get a grasp on them.

And once you do have a hold on them, then you need to learn about the different types of crypto, how and why they work.

Limited Long-term Track Record

Crypto has not been around very long. Bitcoin, the first established cryptocurrency, was only introduced in 2009. Compare that to some other financial instruments, which have been around for centuries, in some cases, like loans or bonds.

As such, how and why crypto is used could change. It’s still an evolving technology. Again: Important to keep in mind.

Scalability and Network Congestion Issues

There may be questions as to how well some blockchain networks can scale, or handle an increasing number of transactions as time goes on. Some networks do experience congestion problems, or slowdowns, when many users are trying to utilize it in one way or another.

That’s something crypto users should keep in mind, as it’s possible that these issues could create some problems at some point, such as processing delays.

Security, Hackers, and Scams

As discussed, the crypto space does have security risks to be aware of. There are scammers and hackers in the space, and while the blockchain ledger, in of itself, is in many ways considered highly secure, it’s also possible that some of them could get around certain security safeguards on some networks or crypto platforms, such as accessing wallets to pilfer holdings.

While it’s likely that platforms and crypto holders will get better at keeping bad actors at bay over time, it’s still a good idea for anyone who owns or is otherwise in the crypto sphere to remember that nothing is ever 100% safe.

Uncertain and Evolving Regulations

The rules and regulations surrounding crypto are quickly changing. While crypto was once considered sort of the “wild west” of finance, governments and regulators are introducing guard rails. For instance, as of 2025, a host of new rules and regulations have come into play. Do your best to stay abreast of regulation changes.

High Energy Consumption and Environmental Impact

Crypto mining is resource intensive, and sucks up a lot of energy. That can have an environmental impact, which may be important to some people who are hoping to reduce their carbon footprint. This may evolve over time, but again: Something to keep in mind, and likely worth further researching if you’re concerned about the environmental impact of crypto.

Irreversible Transactions (No Refunds or Cancellations)

Another thing to remember about crypto is that it isn’t like cash or a credit card. If you engage in a transaction, there’s no take-backs. You can’t get a refund (well, it’s possible, but don’t count on it) or cancel your transaction. You won’t have the backing of a large financial institution, either, to help in most cases.

Risk of Data Loss or Losing Access to Wallet

It bears repeating: You need to keep track of your wallet and private keys. If you lose access to your crypto wallet or lose your keys, it’s possible you may never get back in, and you could effectively lose your holdings.

Centralization Risks (Power Concentrated Among Few Holders)

Industries tend to collapse and become more centralized over time, and some note that this is already being seen with Bitcoin, to a certain extent, as it becomes less accessible to those with fewer resources. It’s happened in just about every industry you can imagine. It could also happen in the crypto space. It’s difficult to say what that could mean for crypto users or holders at this point, but again, something to be aware of.

High Participation Costs for Some Networks

Some cryptos and their respective blockchain networks have high associated costs. That is, you may pay high gas fees for executing transactions, or other related fees or costs. While that will depend on the specific network, users should know that it’s possible they’ll need to pay, in some instances, for using a crypto’s network, and that it may be more than anticipated.

Evaluating Different Cryptocurrencies

With so many cryptocurrencies on the market, figuring out which, if any, are the right one for your financial situation could require some homework. Here are some factors to consider when evaluating different cryptocurrencies.

Key Factors to Assess Before Choosing a Cryptocurrency

Before getting granular and assessing one crypto versus another, there are some broad things about the crypto space to keep in mind.

For one, crypto is still a young technology or instrument. The rules are changing, the technology is evolving, so it’s important to stay current with the crypto industry at a higher level, as well as with each cryptocurrency you’re considering buying, holding, or selling.

Weighing the Pros and Cons of Each Cryptocurrency

Some cryptos can be designed specifically for certain projects or uses. Some cryptos, for instance, are designed to work with metaverse projects or games, and can be used to help create in-game assets or tokens.

That’s all to say that each crypto is different, and each has its pros and cons. For instance, some cryptos are much more widely used than others. But they may also have higher associated costs.

Bitcoin and Ether transactions costs can range from a few cents to several dollars or more. Other cryptocurrencies, like Litecoin, XRP, and others, might be able to be sent for less. Payments for most cryptos settle within minutes, and some within seconds. Conversely, wire transfers can cost significantly more, and often take three to five business days to settle.

(Be aware that while SoFi members will soon be able to buy, sell, and hold a selection of cryptocurrencies, such as Bitcoin and Ethereum, other cryptocurrencies mentioned may not be offered by SoFi.)

NFTs and Other Tokens: Special Considerations

NFTs, or non-fungible tokens, are another type of instrument in the crypto space, and may or may not be “cryptocurrencies” as we think of them. Effectively, NFTs are not interchangeable with each other, each is distinct. So, Bitcoins are not NFTs because one Bitcoin is virtually indistinguishable from the next.

Conversely, one NFT is connected to some other asset, such as a piece of art, a legal document, or the ownership rights to something. It can’t be copied, as there cannot be two deeds to a house, for instance.

The point is, NFTs are similar, but not exactly the same. There may be other tokens in a similar vein.

Essential Considerations for New Crypto Holders

If you’re just getting started with crypto, here are some things you should consider.

Understanding Personal Risk Tolerance and Goals

Cryptocurrency can, as discussed, be a part of a whole financial plan, system, or strategy. But how, if, and why someone adds them to their broader financial portfolio will depend on an individual’s own goals and risk tolerance.

Security Best Practices and Private Key Management

You’ll also want to make sure that you’re confident in your ability to keep your crypto safe. You can’t rely on a third party to keep your crypto under lock and key (in some cases), so it’ll be up to you to manage your wallet and keep your private keys, well, private.

You also don’t want to lose your private keys, because it may be impossible to get back into your wallet in some cases if you lose it, effectively locking up your assets forever.

Staying Informed About Market and Regulatory Changes

Also as discussed, the crypto space is evolving. Things are changing rapidly, and that includes which cryptos exist, which don’t, and the rules governing them. You’ll want to do your best to keep track of changes to the crypto markets, and consider how those changes might affect your financial plan.

Avoiding Common Scams and Mistakes

Finally, remember that the crypto space is filled with scammers and bad actors. Keep your head on a swivel, and remember that some things are too good to be true. Similarly, there is a learning curve with crypto, and it’s likely you’ll make some mistakes along the way. Do your homework, think through what you’re doing, and try to learn from mistakes you may make.

The Takeaway

Ease of transactions, accessibility, and blockchain security are among the most important advantages of cryptocurrency. Many cryptos are designed to have unique advantages, even if they don’t have widespread use or adoption yet.

Of course, there are potential flaws as well, volatility being a major risk factor. As with anything, though, those interested in buying, selling, and transacting in crypto would be wise to do their research before getting involved in the crypto market.

Soon, SoFi members will be able to buy, sell, and hold cryptocurrencies, such as Bitcoin, Ethereum, and more, and manage them all seamlessly alongside their other finances. This, however, is just the first of an expanding list of crypto services SoFi aims to provide, giving members more control and more ways to manage their money.

Join the waitlist now, and be the first to know when crypto is available.

FAQ

Is cryptocurrency really worth it?

Cryptocurrency can be worthwhile and may have potential benefits for those who wish to buy, sell, or hold assets, or conduct peer-to-peer transactions. It does, however, have associated risk, such as price volatility. As such, crypto users or holders should do their homework before getting in the market.

What is the biggest downside of cryptocurrency?

While subjective, it’s possible that the biggest downside of cryptocurrency is that its value tends to be highly volatile. So, you may use it as a store of value, but it may rapidly lose value. Conversely, it’s possible it could gain value, too. In that sense, it’s unpredictable.

How do I weigh up the pros and cons of each cryptocurrency?

Many cryptocurrencies are similar, but most are their own, unique projects. As such, researching how they each work, what their intended use is, and what the potential drawbacks are for each crypto is a good place to start when weighing pros and cons.

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Article Sources

1. Bitcoin.org. Protect your privacy.

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