What are the Limitations of Bitcoin?
With thousands of cryptocurrencies in the digital market, one might think that Bitcoin has lost its significance. However, the popularity of Bitcoin is on the rise and is now being adopted by influential people. When Elon Musk spoke in favour of Bitcoins, it not only led to a rise in the popularity of Bitcoin but also its value. One of the major concerns about using Bitcoin is the energy consumption. Shifting to green energy sources can be a great initiative. Explore solarblox.co to learn about the solar energy sources.
Even with its rising popularity, the risks associated with Bitcoin cannot be undermined. These pose
a serious threat to those interested in Bitcoin and should be understood thoroughly. The following are some of the most significant risks associated with Bitcoins:
Theft, Security Risks and Scams
The Bitcoin market has faced several attacks, frauds and thefts. From Ponzi schemes to security breaches of massive scale are all risks one undertakes when investing in a cryptocurrency like Bitcoin. The reason scammers most target Bitcoin is because other cryptocurrencies do not have as many users required to make the scam successful or profitable for the criminals. Several thefts are associated with Bitcoins. Your private key might be available from Bitcoin exchanges and stolen. Similarly, your wallet can be vulnerable to attacks if not appropriately protected. There are even illegitimate exchanges and wallets on the Internet that might rob you when you are trying to exchange money for Bitcoins.
Volatility in Price
While no other cryptocurrency is as stable as Bitcoin, even then, the value of Bitcoin is susceptible to volatility. In the past, the market has seen an unexpected rise and fall in the price of Bitcoin in relatively short periods. While it might be beneficial on a short term basis, because of its unpredictability, some investors find it challenging to trust Bitcoins.
Association with the Dark Web
Although Bitcoin balance is kept on a public ledger, Bitcoin is still one of the most important names associated with trade exchanges happening on the dark web. This leads to a bad reputation for Bitcoin holders. Since there are reports of more illegitimate exchangers happening with the help of Bitcoins in comparison to legal ones, Bitcoin is considered quite shady in the public eye.
Lost Wallets
Bitcoins are generally stored in hot or cold wallets. However, if these wallets are attacked by some virus or they crash, you lose all your Bitcoin. When such incidents happen, the holder has no option to recover the lost Bitcoins. Hence even the most wealthy Bitcoin owner can be made poor in a matter of seconds if they lose access to the wallet.
No Refunds
While most traditional payment processes and credit card companies offer standardised policies for refunds, the same is not valid for Bitcoin. If users lose money e because of transaction fraud, they will never be able to get a refund of the Bitcoin. The decentralised structure of Bitcoin actually makes it absolutely impossible for a particular party to act as a middle man between two users. While it is true that miners can record transactions, they cannot make sure that they are legitimate.
Not Accepted Widely
Bitcoins are not accepted as a formal mode of payment in most situations. For example, you cannot imagine buying a packet of biscuits in exchange for Bitcoins from a local seller. Even online, Bitcoin is only accepted by a very minute percentage of online merchants. Hence even if someone wants to rely on Bitcoin ultimately, it is not a feasible model.
Risk of Replacement
Even after releasing over thousand other cryptocurrencies, bitcoin stands undefeated in its popularity and value. However, while this is true for now, some new cryptocurrency may be introduced in the market, later on to defeat Bitcoin and become much superior ultimately. There are newer cryptocurrencies that come with a host of advantages- they make it harder for the system to track transactions or identify users, guaranteeing user anonymity like never before. If such cryptocurrencies become even more popular, they will easily be able to overthrow Bitcoins.
While investing in cryptocurrencies like Bitcoin may feel very exciting, it is vital to make an informed decision. Make sure to understand the pros and cons before making the final decision. Look for proper wallets and exchanges, and do your research thoroughly before investing your hard-earned money.
