Lack of Awareness and Understanding. Fact is many people are still unaware of digital currencies and Bitcoin. People need to be educated about Bitcoin to be able to apply it to their lives. Networking is a must to spread the word on Bitcoin. Businesses are accepting bitcoins because of the advantages, but the list is relatively small compared to physical currencies. Some of the big companies accepting Bitcoin as payment is great. However, they must hire staff that has knowledge about digital currencies. The workers who may need to be educated on Bitcoin cannot be beneficial for both sides. Otherwise, there won’t be any benefits for such large companies accepting bitcoin.
Risk and Volatility. Bitcoin has volatility mainly due to the fact that there is a limited amount of coins and the demand for them increases by each passing day. However, it is expected that the volatility will decrease as more time goes on. As more businesses, medias, and trading centers begin to accept Bitcoin, its’ price will eventually settle down. Currently, Bitcoin’s price bounces everyday mainly due to current events that are related to digital currencies.
Still Developing. Bitcoin is still at its infancy stage with incomplete features that are in development. To make the digital currency more secure and accessible, new features, tools, and services are currently being developed. Bitcoin has some growth to do before it comes to its full and final potential. This is because Bitcoin is just starting out, and it needs to work out its problems just like how any currency in its beginning stage would need to.
Untraceable. This feature of Bitcoin of also attracts crime. People can buy and sell drugs and other illegal items with significantly less risk of being tracked by authorities. Bitcoins in this regard are similar to regular cash which is used by criminals. This fact may bring unwanted attention from governments that will outlaw Bitcoin.
Easy to lose. Credit card is stolen or somebody hacks bank account there is a good chance that owner will not lose any money as banks will fix your balance. Even cash can be potentially recovered if the police acts fast. But with Bitcoin if owner loses it, there is no mechanism to recover stolen or lost Bitcoins. The best way to store Bitcoins is on disk that is disconnected from the internet.
Hard to trade. Users cannot use a credit card to buy Bitcoins online specifically because of the reasons outlined above. There is no easy way to buy or sell it. There are many exchanges that offer such services in various ways, but it’s not as easy as transferring money to and from a PayPal account just yet. This is likely to improve fast as more services will compete to offer convenient solutions.
Can’t buy stuff. There aren’t a lot of places where Bitcoins are accepted as payment. This is likely to change, but for now the average person will mostly buy Bitcoins as investment.
In Conclusion. Bitcoin is not perfect. It does have many advantages that physical currencies do not provide its users; however, it also has its disadvantages. This is mostly due to the fact that Bitcoin is still a relatively young and new currency. People are just beginning to become more aware of it. In order for Bitcoin to succeed, more people need to understand what it is and not let their preconceived notions distort the concept of digital currencies.
1. Views on Bitcoin
Bitcoin is a very new concept in the money market. Thus creating misconceptions somehow easily. This section contains the views of a few group of people about Bitcoin in their area of expertise.
1.1 IT Experts
Bitcoin has brought new era to the markets also currency world. Moreover, programmers and IT professionals have good impression for Bitcoin, especially the IT professionals in the cryptography field. Bitcoin has brought innovative solutions to most problems on the other hand pointing out its shortcomings. Besides it is not fully anonymous and may not scale in the future. However, Security experts reviewing the source code, they did not find any concerning vulnerabilities.
1.2 Legal Experts
Bitcoin has been operating in a legal gray area. There have been no legal acts taken against Bitcoin, nor have there been any legalization that address any Bitcoin currency. 9
Determining the legal status of how Bitcoin should be handled is the main problem. If Bitcoin is a currency, security, commodity or something completely different. Today bitcoin is commonly referred as ‘currency’ as it has many common points with currencies.
1.3 Economic Experts
The biggest challenges that Bitcoin currently faces are flow of funds, a lack of market makers, and outsized exchange rate risk. It’s nearly impossible to move USD in and out of the largest trading platform (MtGox) and, as a result, there are very few significant market makers participating in the exchange. Absent reliable providers of a liquid marketplace, volatility will remain high. This presents major difficulties for businesses and individuals that might otherwise accept Bitcoin as payment for goods and service in forecasting Bitcoin exchange rate risk. Bitcoin can’t be a viable long-term currency unless, and until, it is more broadly accepted as an exchange medium for items of real value (i.e. these goods and services). These challenges are interconnected and the
current regulatory assault is the single most important aggravating factor to these circumstances. 10
Bitcoin really needs to be broken down into two areas: viability as a currency and as a trading vehicle. As a viable currency, I’m excited and fearful for it. I love the thought of taking the power away from our government and the Fed’s ability to print money into infinity. On the dark side of it, Bitcoins can be used to hide large transactions from governments which really opens the door to black market activities. It’s far too young for me to get involved in Bitcoin in my own life as I fear that global governments will try to shut it down as they will be losing billions in tax revenue if Bitcoin gets really big.
As a trader, it offers some incredible opportunities. Price fluctuations have been all over the map recently. In the last 2 months Bitcoin has risen nearly 100%, prior to that it fell 55% in 2 months, in April it fell from 81% in 6 days! This volatility is incredible and, if you’re on the right side of the trade, can be very profitable. 11
1.4 Government and Politicians
The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days.
According to the report, it is likely for Bitcoin to become a payment option for cyber criminals and it is possible that Bitcoin will be used for money laundering. Moreover, the report stated with high confidence that potential Bitcoin thieves will target third part services and individual users’ wallets in order to steal Bitcoins. At last, due to Bitcoin’s anonymity, it would be hard to link owners and their address until they would exchange their Bitcoins for fiat money.
1.4.1 European Union
Bitcoin is trending worldwide, and regulators and bureaucrats from individual countries are discussing the subject quite heavily. Political bodies from the U.S., Asia, and EU have been talking about the many ways they can regulate the cryptocurrency by clamping down on bitcoin businesses and exchanges. Politicians from the EU particularly have been concerned with terrorism financing, money laundering, and tax evasion that they believe can be tied to cryptocurrencies. However, at this stage Bitcoin won’t be regulated in European Union.
China banned mainland residents from trading in cryptocurrencies on exchanges and made it illegal for Chinese start-ups to raise funds via initial coin offerings — a hybrid of crowdfunding, venture capital, and initial public offerings, to put it simply. Bitcoin prices fell. It is not a secret that Chinese government is prone to an excessive control over its citizens and their rights. Often having an element of control over every aspect of a daily civilian life – from a number of children that are allowed, to what is accessible on the internet. With so many strict laws, it should not come to a surprise that a decentralized and anonymous Bitcoin will be tackled as well.
Another popular misconception is that the ban means the end of Bitcoin and other virtual currencies in China. It is not strictly true – although online transactions have been banned, over the counter sales have not been mentioned. So if somebody is already in possession of Bitcoin, it is still legal to sell it directly to a buyer or use it a payment method, whether it is online or in physical retailers.