The Cryptocurrency market is slowly taking its pace, with certain limitations, which hampers the widespread adoption of the model. Let’s see what these limitations are.
Lack of understanding and non-backing from any Central Authority. This is a novel model and only a fraction of the world populations has its enough understanding. Add to it, no backing from any Central Authority. This gives investors a sense of insecurity in making transactions.
Cryptocurrency is a complex model and the lack of knowledge makes a novice investor vulnerable to hackers.
Still there are many countries and banks which do not recommend crypto transactions and investments. The lack of their support makes people uncertain to invest in crypto and sometimes this causes to spread FUD in a market. In the eyes of many people, cryptocurrencies are used in dark web to support illegal activities, like terrorism and other illegal activities.
Volatility. The Crypto market is more volatile as compared to the Stock Market. It is a small market (only millions of dollars traded a day) as compared to the Stock market (where trillions of dollars are traded every day). Hence even a small change in the Crypto market makes a huge impact.
In addition to this you cannot apply as much precision in predicting the Crypto market as you can in a Stock Market. A Stock can be predicted close to precision, by a technical analysis of the company whose stock you wish to analyse. You can look out for the company’s profit and loss, its products, it goals, its assets, its liabilities, etc. to have a close analysis of the intrinsic value of the stock. The Crypto on the other hand has no such attributes which can be diligently assessed to gain an idea of its value. Hence while trading in Crypto you only rely on Crypto news which can be fabricated/fake for a latent benefit.
Add to it the completely different behaviour of different cryptocurrencies at the same time. For example at the same time Bitcoin’s price can be a thousand dollars while other cryptocurrencies are still a few hundred dollars.
Vulnerable to cyber-attacks. There are many crypto exchanges which do not employ proper security mechanisms and hence are more susceptible to hackers. Sometimes the exchanges do not have the systems in place to host their growing user base, which leads to a crash. These hacking and crashing add to the volatility of the crypto market. Some cold wallets like the Ledger Nano are one of the safest and most secure wallets to host your cryptocurrency.