Last year, cryptocurrencies emerge as new alternative for hard cash. Between January to December last in year 2017 alone, the price of Bitcoin increases by over 2,000%. Right now, the market camp for Bitcoin is over $120 billion. However the exciting part isn’t just Bitcoin but the way blockchain technology, behind Bitcoin, can affect the future.
Blockchain technology has taken the word by storm
There are number of reasons that blockchain technology is branching so fast. Perhaps the most significant one is its ability to perform without any centralized or commanding authority. No one really controls it. The core concept behind the technology is its being on decentralized network. Every peer or node in the decentralized network ensure the validity of transactions using a consensus mechanism.
Every transaction in block chain is irreversible. That means, once data has been verified and entered into the system, there is no way to reverse it. No one can reverse it. Not even the person who initiate it at first place, which is a big advantage and increases people’s trust. As there is no need of a third party to validate or verify the transaction, overhead cost reduces immensely, making block chain transactions cheaper and efficient than regular banking system. All transactions on block chain are secured and encrypted. It is almost impossible to break into the system. Every transaction is validated by all nodes in the network. If it crashes on one node, it fails completely. There is no fear of being bank rob here, as there is no psychical cash or property that can be stolen or taken away.
Problems with crypto
Despite being cryptographically secure and decentralized, it still poses some problems for buyers.
Over the past few years, cryptocurrencies faces lots of criticism and hype. That cause the price of cryptocurrencies to be very volatile. Few days it see an increase and other days, it experience lost as much as 50% of their value without any warning. Paypal was one of the first platforms to accept cryptocurrencies in 2014. However, CFO John Rainey isn’t sure about the continuation of the service due to the volatility of crypto currency.
In an interview, he said,
“If you’re a merchant and you have, let’s say, a 10 percent margin on a product that you sell and you accept Bitcoin, for example, and the very next day it moves 15 percent, you’re now underwater on that transaction… You could have something that appeals to consumers, but if merchants don’t accept it, it’s of little value. Right now, we don’t see a lot of interest from our merchants.”
Crypto currency isn’t associated with any identity that makes it perfect for black market and money laundering. That alone is sufficient reason for many countries to slack the cryptocurrency exchanges. China in particular has banned any transaction related to cryptocurrency and exchanges had to move to Singapore. Every country has their own standard when it comes to crypto currency. Many people hesitant to risk their amount due to these legal uncertainties.
Crypto currency seem to attract hackers
Bitcoin and other crypto currencies are hard to break but who says, you can’t try. Hackers are targeting the most popular crypto exchanges and startups. Many exchanges have experience hacking attempts. They have increased security precautions in order to protect their user’s data. Chainalysis, the blockchain tracking company has estimated over 3 million Bitcoin lost so far. Since the supply of Bitcoin is finite, this means that over 14% of all the Bitcoin that will ever be created are already lost.
Still crypto could hold the future
Bitcoin and other currencies have come a long way within the past two years alone. With more and more companies coming to join crypto bandwagon, it would be closer to be mainstream than we might think. There have been rumors that a big company like Amazon is planning to accept crypto currencies. The company hasn’t said anything officially but its recent purchases of domain names like AmazonEthereum.com, Amazoncryptocurrency.com and amazoncryptocurrencies.com suggest otherwise. Who knows, within a few years, Bitcoin could be new cash and use for buying and selling groceries.