Crypto Currencies "Criticism"

In 2013, journalists Joshua Brustein and Timothy Lee expressed concern that bitcoin is problematic due to its high volatility.

In December 2013, Jason O'Grady reported on various pump and dump schemes in alt-coins distinct from bitcoin and Lite-coin.

Community refers to pre-mining, hidden launches, or extreme rewards for the alt-coin founders as a deceptive practice, but it can also be used as an inherent part of a digital crypto-currency's design, as in the case of Ripple. Pre-mining means currency is generated by the currency's founders prior to mining code being released to the public.

Most crypto-currencies are duplicates of existing crypto-currencies with minor changes and no novel technical developments. One such, Coinye West, a comedy cryptocurrency alluding to the rapper Kanye West, was served a cease-and-desist letter on 7 January 2014, for using West's name and implying a connection that did not exist.

Banks generally do not offer services for crypto-currencies and sometimes refuse to offer services to virtual-currency companies.

There are ways to permanently lose cryptocurrency from local storage due to malware or data loss. This can also happen through the destruction of the physical media, effectively removing lost crypto-currencies forever from their markets.

There are many perceived criteria that crypto-currencies must reach before they can become mainstream. For example, the number of merchants accepting crypto-currencies is increasing, but still only a few merchants accept them.

With technological advancement in crypto-currencies such as bitcoin, the cost of entry for miners requiring specialized hardware and software is high.

Cryptocurrency transactions are normally irreversible after a number of blocks confirm the transaction. One of the features cryptocurrency lacks in comparison to credit cards is consumer protection against fraud, such as charge-backs.

Some coins may be a project with little to no community backing and no visible developer.

While crypto-currencies are digital currencies that are managed through advanced encryption techniques, many governments have taken a cautious approach toward them, fearing their lack of central control and the effects they could have on financial security.

Environmentally conscious people are concerned with the enormous amount of energy that goes into cryptocurrency mining with little to show in return, but it is important to compare it to the consumption of the legacy financial system.

Traditional financial products have strong consumer protections. However, if bitcoins are lost or stolen, there is no intermediary with the power to limit consumer losses.

Regulators in several countries have warned against their use and some have taken concrete regulatory measures to dissuade users.

The success of some crypto-currencies has caused multi-level marketing schemes to arise with pseudo crypto-currencies, such as One-coin.