It has been years since our lives started getting digitized and with the rise in technology, the way we acquire goods and services, watch movies and make payments changed drastically. Funds got digitalized and formed a new currency variant- cryptocurrency. Here, in this read, we’ll be discussing the major issues that one of those cryptocurrencies and its users have been facing. What is a better discussion than talking about Bitcoin, the first-ever crypto that holds the highest value in today’s market? Nothing. You should also know that there are tons of issues that have been clearly visible but there are many that do not get discussed so often. In fact, it is as if they don’t even exist. Here, we’ll be focusing on the major problems with Bitcoin that have always existed but have been unseen as they are still considered potential or into the future.
Introduction to the first crypto ever- Bitcoin
Well, you should know that Bitcoin’s existence is only virtual and not physical as it is set up online. Thus it is, in the true sense, a digital currency and the first of its kind. It has a strong decentralized blockchain network that exists without any central bank or any single administrator. This exclusive currency can be moved among all Bitcoin users on its peer-to-peer network that eliminates the requirement for all middlemen and intermediaries. And to add to the information ride, Bitcoin is the highest valued crypto variant known to man to date.
A major problem with Bitcoin that can escalate in no time
Keep in mind that the problems discussed below are not just limited to Bitcoin. There are several other public, permission-less, and pseudo-anonymous crypto variants that are inclusive of some well-known enterprises like Bitcoin, Zcash, Monero, Bitcoin forks, EOS, Ethereum, many Ethereum defi products, and a lot more. Another significant thing to know is that these cryptos have a very special and yet similar design feature that keeps all of them connected.
The problem arose when it was figured out that anyone can create multiple accounts in the encrypted Bitcoin system as and when they want to. Initially, it was directed towards getting rid of the censorship that could be applied to any person using the Bitcoin system. It also leaned towards making improvements in the privacy segment and maintaining or allowing greater anonymity. However, with time some very devastating issues were recorded in the system.
Let’s walk you through the problems with Bitcoin as a currency that was a result of the above service feature:
- Demeaning reputation and accountability- When there’s a free pass to create as many accounts as an individual wants, the chances of relying on any of the reputations behind the accounts vanishes. It should be noted that an account can be programmed to do anything at the protocol level, both good and bad. Thus, that leaves no room for accountability, which in fact, is the foundation of the social conduct we, humans, live in.
- Positive boosting for good behavior is only shown with incentives- There are several studies that show negative reinforcement does not encourage good behavior. And in addition to that, there are even studies that show financial rewards cannot be a part of positive boosting for acceptable behavior. Being a system that is crafted to impact society, how can it favor financial rewards or incentives and how can the society put its faith in the Bitcoin system? It seems like the wealthy are getting all the favor, especially when most of the world‘s population is not in that category. This might have a drastic impact on society and that has been out of focus for a long time now.
- Retention and valuing of existing faith is deteriorating- Bitcoin seems to not give any significance to the interaction between people that we survive on. In a highly technical world along with the new “work from home” culture, we’ve eventually learned to connect and trust people that we haven’t ever met. But on Bitcoin, all these interactions have a thick layer of anonymity and the trust gets replaced with financial rewards (anonymous).
The detailed read above will walk you through the major problems with Bitcoin that has always existed with us but has never received the significance it should have. You’d get a brief introduction of the first-ever crypto variant and one of the services that initially, was meant for bettering the privacy feature and keeping the anonymity intact. However, reading on you’ll learn the different issues that came along.