5 factors that inhibit Bitcoin's propagation
After the first version of Bitcoin was released in January 2009, Bitcoin has gained a bigger popularity among the worlds population as well as their belief in the currency. This has been especially due to the fact that more and more people have become aware of the technology as well as the opportunities that the technology enables within the financial sector. It is not unknown and more and more people already knows Bitcoin - even established financial instituations.
It's e.g. the opportunity to provide the approximately 2 billion people who do not have a bank account or access to financial services - but who have a mobile phone access to financial services. Or make money transfers across national borders significantly faster to significantly less in fee. Just to name a few examples.
Even though we love Bitcoin as well as its technology, Bitcoin is not necessarily joy and gammen.
As with many new technologies, there are some bottlenecks that inhibit the development of technology as well as propagation. These factors are bottlenecks, as they result in a slower spread of technology among the population. This is because there may be some degree of risk associated with phasing in the technology.
That's how it works with Bitcoin.
In this post, I look beyond our great faith in Bitcoin - focusing exclusively on the 5 most significant factors that inhibit Bitcoin's propagation worldwide. Also what you call in English; mass adoption. If you improve or manage to completely eliminate these factors over the next few years, you will probably see that Bitcoin will achieve an even bigger as well as faster dissemination.
Hard to understand - Factor 1
To many people Bitcoin's technology is very hard to understand.
It is even very few who have an understanding of how traditional currencies function - also called FIAT currencies such as the Danish krone. Or simply understand the issues that FIAT currencies possess as Bitcoin resolves, which ultimately serves as the incentive to understand Bitcoin.
When a large part of the population does not have a better understanding of how Bitcoin works, a propagation takes just a little longer. This is because people do not want to buy anything or otherwise support something that they do not fully understand - or even understand why they should get into it to start with.
The more that understands Bitcoin - or understand why it's essential to revolutionize the financial sector, you'll also find Bitcoin gaining a wider spread.
It is comparable to the Internet. Looking back at the Internet's cool start, there were also a lot of people who did not understand the internet. Or what issues the Internet solved. It took time before people understood this - and it will also be apparent that Bitcoin is aware of the fact that we are truly experiencing a widespread spread and understanding of Bitcoin as well as crypto currencies in general.
Price Volability - Factor 2
When looking at the Bitcoin rate, Bitcoin turns out to fluctuate significantly more than traditional currencies such as the Danish krone or the American krone. This is what you call volatility when a given course fluctuates much both down.
That makes Bitcoin very much.
Price volatility is a challenge for Bitcoins, making the currency difficult to pay
If you invest actively in Bitcoin, then it's a good thing. However, when a given currency serves as a means of payment or value retention, it's not a good thing that the exchange rate fluctuates a lot. This is because it is difficult to use a currency actively, whose value fluctuates much up and down over a short period of time.
Notwithstanding the fact that a lot of money is invested in Bitcoin - as is also done in great style in traditional currencies - Bitcoin is created as a currency for payment means, as well as value retention. This is where the incentive for Bitcoin is - and wherever it is in the future. That's what's going to drive the currency.
There is a disadvantage that there is such volatility on the price, because it is very essential that Bitcoin works as well as possible as a means of payment, as well as value retention. As a result, price volatility has a negative impact on Bitcoin's spread.
Scalability - Factor 3
If you look closer into Bitcoin as well as technology, you'll find that the technology behind has big scaling problems. That is, it is difficult for Bitcoin technology in its current form to scale to handle more transactions than the network already handles.
This makes you pay far more in network fees than what is good. And the individual transactions on the network achieve a longer processing time before they are received from the recipient. Two critical factors for a payment method.
It is a bottleneck that relates to the above issue. Namely, Bitcoin is created for value retention - and not least as a means of payment.
When Bitcoin is relatively scalable in its current form, the currency works less well for the latter; namely as a means of payment. This means that the incentive for using Bitcoin will be less, which means that the currency will thus achieve a smaller spread worldwide.
Security Challenges - Factor 4
When you talk about Bitcoin as well as cryptovaluta generally, one can not help talking about the security challenges.
Over the past years - since the first version of Bitcoin - there have been several major security flaws in internal systems that have caused major financial losses. This counts blah. Mt. Gox, which was hacked in early 2014. It was at a time when the stock exchange handled about 70% of all Bitcoin transactions, where about 850,000 Bitcoins were stolen.
That's why Bitcoin has a real challenge. And as a result, many do not want to buy Bitcoins or otherwise start trading with crypto currencies due to the worry that they may potentially be hacked. It is also possible with traditional banking systems. In these cases, however, the bank will most often cover the loss where there is no dear mother if it happens with one's cryopause. Therefore, many people associate that store Bitcoin or other crypto currencies with a high risk.
It is important to emphasize that Bitcoin - the Bitcoin currency itself - can not be hacked because technology is based on Blockchain. The last name is definitely hacker-safe. It is only possible to hack wallets, stock exchanges, etc. It is comparable to the fact that you can not hack the Danish kroner, but you may hack a respective online bank.
Usability - Factor 5
The last factor that has a negative impact on Bitcoin's propagation relies on several of the above factors. The last factor is user-friendliness when using Bitcoin or another crypto.
Comparing user-friendliness with the use of Bitcoin versus traditional financial services such as one's online banking, finds that the ease of use is further advanced by traditional financial services versus Bitcoin.
This is natural because the development of traditional services has been going on over significantly longer time versus Bitcoin.
But unfortunately, many people opt out of Bitcoin because it is either too complex or too time consuming. A good example of this is the entry barrier at Bitcoin. Before you can start buying Bitcoins or otherwise using Bitcoins, you need to set up a Bitcoin wallet. Too much of the Danish population is too difficult why they never get started with Bitcoin. Was it a bit more user-friendly to use Bitcoin you would probably see that even more would use Bitcoin.
Although the latter factor at the time of writing is a negative factor, it is also an excellent example of the fact that Bitcoin is the right way.
If we see just a couple of years back in time, user friendliness was worse than it is today what, for example. concerning Bitcoin wallets. Over the past couple of years we have seen new wallets as well as relaunches of existing ones, which are more user-friendly than the predecessor. This will also be seen in the future. For this reason, we will find that Bitcoin is becoming more and more user-friendly for each day.