Even though Bitcoin has a lot of impressive strengths, it’s not perfect. There are still many holes it should cover. The cryptocurrency still has a lot of weaknesses.
One can think of these weaknesses as hurdles that Bitcoin needs to surpass before it can be accepted as a major mainstream mode of payment in the financial market. However, the weaknesses explained below are not meant to negate or cancel out the strengths the digital currency sports.
There’s even a great possibility that these weaknesses will soon be solved, though for now they remain the weaknesses of the digital currency.
If you’re planning to invest in cryptocurrencies and in Bitcoin, you should read this article.
Although it hasn’t taken place a lot yet, once can easily predict that governments from around the world will start interfering with the growth of Bitcoin. Whatever the form it will take, it’s undeniable that Bitcoin attracts much attention from the governments, and, one way or another, the central institutions in different countries will start doing something about the technology.
On the other hand, this might also bring some good things to some extent. To be specific, government interference may be a good thing for those who are worried that the Bitcoin technology might be used for illegal activities like money laundering and such stuff.
One can conclude that potential government interference, with some amount of compromise, can bring more good than bad to the continuously growing cryptocurrency.
Bitcoin is subject to deflation. That means it may end up in what’s known as deflationary spiral, which is extremely difficult to get out of once it rolls out.
Since there’s limited amount of Bitcoin (only around 21 million units) to be made long into the future, there’s a possibility that it’ll just keep increasing in value.
Even though that might sound good initially, it wouldn’t paint a good big picture for investors. If deflation occurs too quickly, investors won’t want to invest large amounts of BTC since their efforts won’t be rewarded as BTC becomes more valuable during the time they spend to create the product and take it to the market.
Accidental Loss and Theft
Since Bitcoin doesn’t have any built-in protection mechanism, it’s quite possible for someone to lose his or her wallet file. And when that happens, the Bitcoin they had in the wallet will be taken out of the system probably forever. This could further spur the problem of deflation that was mentioned above.
In addition, if some manages to steal some Bitcoins from another person, there’ll be no way to reverse the transaction, even if there are tons of proofs that theft had occurred.
The Bitcoin system is built in a way that once a transaction happens it’s will never be undoable. If not, it would then destroy the integrity of the blockchain.
With most other financial methods, like credit card, you can contest a transaction. You can get your money back reasonable grounds have been found.