Major Challenges That Have Plagued Bitcoin
Bitcoin has undoubtedly covered a big journey ever since it was launched in 2009. Blockchain, Bitcoin, and cryptocurrency have already become the talk of the town. Many experts claim that the future of Bitcoin is mired with deep uncertainties. While some experts are of the opinion that Bitcoin has everything that will make it as the next leading global digital currency. It may bring some revolutionary changes in the existing financial system as a result of its technology–Blockchains. However, it also faces some drawbacks as well that may cause its downfall. Here are some of the major challenges that have plagued the Bitcoin:
Bitcoin remains vulnerable to price volatility:
Bitcoin may have emerged as one of the most liquid and conveniently exchanged cryptocurrency, but it continues to remain vulnerable to price volatility over small periods of time. Earlier, Bitcoin value registered a sharp decline of over 50 percent as a result of Mt. Gox’s downfall. It was only after the FBI’s declaration that it would consider Bitcoin and related virtual currencies authentic financial services that Bitcoin value began to rise by the same amount. Meanwhile, in the year 2017, Bitcoin value registered a whopping jump only to decline in the initial weeks of 2018 and this led to a wipeout of billions in market value overnight.
Huge consumption of electricity:
It is worth noting that the business of mining Bitcoin comes at a huge cost. When mining of Bitcoin takes place, it requires a huge consumption of electricity that is powered by non-renewable sources. According to a report, the mining of Bitcoin consumes at least 51 trillion terawatts of electricity every year. And, the figures continue to rise at a gradual rate and relentlessly over a period of time. The massive consumption of electricity to mine Bitcoin has also compelled the policymakers to take a closer look at Bitcoin’s carbon footprint.
Security woes and risk of theft:
The security risks that have plagued Bitcoin have emerged as one of the major drawbacks. Anyone who is planning to convert the US Dollar into Bitcoin must consider this point effectively. The factor that Bitcoin units will be near impossible to duplicate does not imply that Bitcoin users will become immune to any possible fraud. The Bitcoin system also suffers from some limitations that can be misused by various hackers searching for an opportunity to rob Bitcoin for their own personal use. Two of the apparent strengths of Bitcoin, namely political independence and powerful anonymity protections, have made it quite striking to thieves and hackers.
Bitcoin continues to remain unpredictable:
Bitcoin still remains an experimental digital currency and equips with a high asset risk. Despite various efforts to allow offline Bitcoin payment, the usage of Bitcoin is still dependent on the availability of the internet. As the currency is still in the development phase, the transaction speed and fees still fluctuate. If you desire to convert Bitcoins into fiat, it will incur expensive fees most of the time.
Additionally, not all the shops and service providers accept Bitcoin. As Bitcoin transactions have become immutable, it means once the money has left your wallet, you will not get it back. And, due to these factors, it has become impossible to call Bitcoin as the world currency.
Experts’ predictions went in vain:
The Crypto industry has witnessed several fluctuations ever since its emergence. It is rare to see anyone making the right forecast. There was a time when people believed that there would be no future for Bitcoin and its price went up to $20,000 instantly. Similarly, when experts predicted that Bitcoin might mark up to one million, it fell to as low as $3,200.
Conclusion
Therefore, we can conclude here that though Bitcoin has emerged as one of the most open financial systems and you can make payments anytime all across the globe, it has a long way to go to emerge as a widely accepted currency.
