Bitcoin is the most well-known and widely-used cryptocurrency. It’s also the largest by market cap. However, Bitcoin mining has a number of limitations that have prevented it from becoming mainstream despite its popularity. If you have also wondered why Bitcoin adoption has been crawling, you may need to keep reading this post.
In this article, you will see a couple of factors that have been identified to be affecting the adoption of Bitcoin across the globe.
Factors Affecting the Adoption of Bitcoin
Bitcoin is not backed by any government or central bank
Bitcoin is not backed by any government or central bank. Bitcoin is not a legal tender, nor is it backed by gold or silver. It’s also not backed by any other commodity, like oil or copper, meaning that many people view it as having no intrinsic value at all. It’s just a piece of code with limited use cases. You should know this before buying Bitcoin.
Transactions are irreversible
Unlike traditional currencies, Bitcoin transactions are not reversible. This means that once you send money to someone, it’s gone for good!
This is a major concern for merchants looking to accept Bitcoin in their stores. Because there’s no way to reverse a transaction once it’s completed, both parties need to be sure about their intentions before making any payments using the cryptocurrency.
For example: if Alice buys something from Bob using fiat currency where Bob doesn’t deliver on time, Alice can contact her bank or credit card company and request a chargeback through them. But if such a transaction is done with Bitcoin, then there wouldn’t be any way to charge back.
Bitcoin is a new technology, and it is still being developed. As such, there are many factors that affect the price of bitcoin. Bitcoin’s volatility is one major factor affecting its adoption as a mainstream currency. This volatility can be attributed to several reasons, including:
- Bitcoin’s supply-and-demand dynamics are still unclear. Its value has been highly volatile in the past because it hasn’t yet stabilized in the market.
- There is no central authority regulating or controlling its price. Instead, it relies on market forces like supply and demand to determine its value. And this makes it vulnerable to speculation and manipulation by traders who want to make money off of bitcoin without actually using it as a form of payment themselves.
Consider also that there’s no central bank backing up your money in case something goes wrong with the exchange where you hold your bitcoins (the place where you trade them for cash). If that exchange was hacked and all its users’ money stolen, there would be nothing anyone could do about it!
This is another obvious problem with Bitcoin adoption – it is used for illegal activities. Criminals love it because it makes transactions anonymous, and that anonymity allows them to hide from authorities. In 2018 alone, over $1 billion worth of cryptocurrency was stolen through hacking or scams.
But it’s not just criminals who are interested in Bitcoin; ordinary people also want to use cryptocurrency to avoid paying taxes on income earned by selling illegal goods or services. This is why governments around the world have been passing laws against cryptocurrencies like Bitcoin. They don’t want people using their currency to avoid paying taxes on their earnings!
Lack of education and knowledge
As a new technology, Bitcoin has many benefits and risks. Unless you’re an expert in computer science and cryptography, you would probably cringe at adopting the digital currency. You may feel reluctant to wait until you can fully understand the technology before making any decisions about using it.
Although there are many resources online to help people understand the currency and how to use it, most people find it hard to commit extra time to learn and understanding how it works, especially with the amount of risk associated with it.
The other big problem facing Bitcoin is scalability. One of the main benefits of cryptocurrency is its ability to be used globally, but this isn’t possible if transactions are slow and expensive. While there are ways to fix it, they’re not without their own problems. And they may not happen in time for Bitcoin to become widely used as a currency.
Despite its limitations, Bitcoin will likely become more widely used in the future
As a new technology and medium of exchange, it is bound to encounter hiccups as it works out the kinks and becomes more secure. However, as Bitcoin matures, users will be able to rely on better user interfaces that make transacting with cryptocurrency easier for everyone. Additionally, if other cryptocurrencies gain traction (as many hope they will), then this could also help ensure Bitcoin’s longevity.
Despite its limitations, Bitcoin will likely become more widely used in the future. It has already proven itself to be a strong store of value and a viable alternative currency for many people around the world. As time goes on, we may see more businesses accept cryptocurrency as payment options, and even governments develop their own digital currencies.