The popularity of bitcoin is connected with being able to purchase things across the world without changing currency, as well as being able to stay anonymous and do business without interference from government agencies.
Even though its popularity is growing rapidly, there are issues preventing the global adoption of bitcoin. Before cryptocurrencies can become a common part of our lives, there are a few problems that need to be addressed.
Bitcoin Security Risks
Anytime you do business online, there are risks. Unfortunately, bitcoin is not immune to these risks. Malware, scams, and theft can happen anytime you buy something online. Digital crime is a constant threat, and since cryptocurrencies only exist in a digital state, users need to be incredibly diligent in order to protect their money.
Over the years, hackers steal millions of dollars worth of bitcoin. Methods of theft include installing malware onto hardware holding bitcoin codes and wallets, DDOS attacks during transactions, and gaining access to bitcoin wallets and stealing everything inside.
Any device used to access a bitcoin wallet needs strong malware and firewall security. An infected device could lead to funds being misdirected while being sent, the total loss of a wallet, or even your bitcoin being held for ransom. Unfortunately, this level of security does have its disadvantages. It makes bitcoin less flexible than other payment methods such as Paypal or debit cards, especially when it comes to real world purchases.
One of the biggest drawbacks to using bitcoin is also its largest benefit; there is no government interference and users are anonymous.
So what happens if someone scams you while using bitcoin?
When using US currencies with online services such as Paypal, there are options if you get scammed. On Paypal, scams can be reported and you’ll be reimbursed. Many online portals have similar policies designed to protect consumers. Furthermore, if you fall victim to a scam, you can file complaints to multiple US agencies, including the FTC, National Fraud Center, and the Better Business Bureau.
However, there is no consumer protection when using bitcoin. If someone steals your money, you have no recourse. The creators won’t reimburse you and the government can’t do anything either. It’s for this reason that many businesses are afraid to use bitcoin as a currency. Without taking extra (and often expensive) steps to protect themselves from getting scammed, they put themselves at risk of losing money.
Until there is a secure way to prevent scammers from simply walking away with bitcoin, many users and businesses are likely to stay away from cryptocurrency.
Bitcoin Has Wild Fluctuations in Value
Though cryptocurrencies have existed for about a decade, it’s only recently that they’ve become an investment tool. As it currently stands, the value of bitcoin is fluctuating wildly — sometimes dropping thousands of dollars overnight. While these fluctuations make for a good investment for risk takers, they make it impossible for bitcoin to become a recognized global currency. Indeed, its volatile nature makes doing long term business dangerous.
If the value of bitcoin stabilizes, it is likely that both companies and private citizens alike will flock to the currency as a means to do international business and avoid some governmental barriers (you will have to pay taxes on transactions.)
What Could Happen Once It’s More Secure
The more secure bitcoin and other cryptocurrencies become, the more likely the world at large will adopt them. Indeed, it will be easier for people to do business overseas without having to lose money when exchanging for local currencies.
While it’s unlikely that you’ll be able to buy your weekly groceries or a cup of coffee in the near future with bitcoin, it does have big implications for large purchases. Many people are investing in cryptocurrencies for their retirement or looking to use them when buying a car or home. However, this will not be a truly safe option until we resolve bitcoin’s many security issues.