Service provider asking for crypto currency for payment? Think again. Here’s our first hand account of the downsides of using digital currencies to pay for services. Cryptocurrency has been touted as the future of money, offering an alternative to traditional fiat currencies and promising a decentralized system free from the control of governments and central authorities. One of the key selling points of cryptocurrencies like Bitcoin and Ethereum is that they offer fast and secure transactions with low fees. However, the reality is that using cryptocurrency for payment also comes with a number of downsides that should not be ignored.
One of the most significant downsides of using cryptocurrency for payment is the lack of recourse when a service provider fails to pay. Unlike traditional payment methods like credit cards or bank transfers, which have built-in dispute resolution mechanisms, cryptocurrency transactions are irreversible once confirmed on the blockchain. This means that if a service provider fails to deliver the goods or services paid for with cryptocurrency, there is little that can be done to recover the funds.
Our parent company and Venture arm, Inovus Investments, experienced this first hand, losing thousands of dollars to a developer who accepted our funds and entered into a legal contract for services – and simply refused to do the work set out in the contract. It turns out this “developer”, Bogumil (Gabe) Roszak (aka @7S_NFT), has a history of failing to deliver on contracts and disappearing with deposit funds. 7S NFT and its owner BG Roszak is now being sued in a UK court by our Venture partner to recover the funds.
This lack of recourse can be especially problematic for consumers and small businesses who may not have the resources to pursue legal action against a delinquent service provider. In addition, the anonymity of cryptocurrency transactions makes it difficult to identify and hold accountable those responsible for fraudulent or negligent behavior.
Another downside of using cryptocurrency for payment is the volatility of its value. Cryptocurrencies are notorious for their high volatility, with prices fluctuating wildly based on market demand and sentiment. This means that the value of a cryptocurrency payment can change rapidly, potentially resulting in significant losses for both the payer and the recipient.
In addition, the lack of regulation in the cryptocurrency market means that there are fewer safeguards in place to protect consumers from fraud and hacking. There have been numerous instances of cryptocurrency exchanges and wallets being hacked, resulting in the loss of millions of dollars in user funds.
Finally, while the decentralized nature of cryptocurrencies may be seen as a benefit, it also means that there is no central authority or institution to turn to in the event of a problem or dispute. This can make it difficult to resolve issues related to cryptocurrency transactions, and can leave consumers and businesses feeling vulnerable and unsupported.
In conclusion, while cryptocurrency may offer some benefits as a payment method, it also comes with a number of significant downsides that must be considered. From the lack of recourse when a service provider fails to pay, to the high volatility of cryptocurrency prices and the lack of regulation in the market, using cryptocurrency for payment can be risky and is not suitable for everyone. As always, it is important to weigh the pros and cons carefully before deciding whether to use cryptocurrency as a payment method.