Name: Lau Wing Yan

Student ID: 20212354

Number of Words: 458
Course code: CCSS4200 – CL05
Tutorial class: CCSS4200 – CT16
Lecturer’s name: Joseph Leung
Tutor’s name: Lo Pui Yi, Phoebe
Date of submission: 31st October, 2023

To assess the validity of the benefits of cryptocurrency, we must first look at the general
public’s opinion of the pros and cons of cryptocurrency. Then make use of critical thinking to
analyze the information in a non-biased way, then come to our own conclusions.

The most popular advantage of the use of cryptocurrency is ‘decentralization’. Meaning that
it is not owned by a single financial or government entity. Thus, ending the monopoly of
money. To analyze the validity of the benefits of decentralization from cryptocurrency, let’s
look further into blockchain.
Blockchain plays the crucial role in cryptocurrency systems for maintaining a secure and
decentralized record of transactions. For instance, In Bitcoin’s case, blockchain is
decentralized so that no single person or group has control – instead, all users collectively
retain control. With the decentralized nature of the Bitcoin blockchain, all transactions can
be transparently viewed by either having a personal node or using blockchain explorers that
allow anyone to see transaction occurring live. Therefore, if a person wanted to, they could
track a bitcoin wherever it goes.

The biggest concern of cryptocurrency is the lack of regulation and volatility.

Cryptocurrency is not legally regulated by central governments. This absence of control and
regulation in the cryptocurrency market increases the risk of cryptocurrency scams and
market manipulation. If federal government do not adopt and regulate cryptocurrencies as
they do with fiat currencies, there will always be a higher risk associated with investing.
There is usually little to no financial disclosures, and usually no insurance protection for
losses arising from market fluctuation, theft, or scams. Cryptocurrency investments and
transactions often lack critical safeguard that exist in the traditional financial system.
To give example, a senior manager at a UK investment firm was scammed with 300,000
pounds of his life saving by cryptocurrency scammers.

Cryptocurrency prices can often fluctuate, while this volatility can lead to quick and large
profits, it can also cause significant financial losses for investors under certain circumstances,
such as when the price of cryptocurrency falls suddenly and massively.
For example, this happened in 2022 when crypto crashed enormously triggered by the
collapse of FTX and other big players. At its peak in 2021, bitcoin was worth $69,000 usd per
bitcoin. After peaking at $3 trillion in November 2021, the value of the overall crypto market
crumbled through 2022, hitting a two-year low of $7986 billion as FTX imploded and filed for
bankruptcy. However, it has since recovered slowly, hovering above $1 trillion most of 2023.
To conclude, although cryptocurrency has a great benefit of decentralization and gives
future economy and currencies a bright and promising future, the lack of regulation and
volatility in cryptocurrency causing massive risks, scams, and great financial losses
invalidates the benefits of cryptocurrency.