By Frederick Briggs, who studied Systems Analysis & Computer Science at Canadore College. Originally published on Quora.
Bitcoin currently has a number of hurdles facing it.
First is scaling:
Bitcoin can currently handle 3–5 transactions per second. Push the number beyond that and you get network congestion, resulting in higher transaction fees and potentially longer verification times. While this may seem trivial at first, most consumers (at least in the West) are not used to seeing transaction fees when buying something, as the seller is the one who gets hit with fees. Although the seller adjusts the price of their goods and/or services to account for the bank fees, the consumer doesn’t have to think about it, or even be aware bank fees are included in their payment.
The lightning network hopes to alleviate this bottleneck with Bitcoin, and make transactions instantaneous, instead of the current 20–30 minutes to get 3 block confirmations. If rumors are true that Amazon are considering accepting Bitcoin directly, the 3–5 transactions per second limit might be grossly inadequate. Due to the small number of people that currently have Bitcoin or could use it, this would be more of a future problem than an immediate one, but a problem none-the-less.
Second is the user interface:
Right now, the banks have multiple ways for consumers to access their money. Debit cards, Credit cards, ATMs, online banking, physical cash (which banks want to eliminate), and physical locations for people to visit and do banking. Setting up a bank account or moving money around is made simple by the user interfaces the banks have in place. There’s an old saying: people are like water, they always find the path of least resistance.
When it comes to banking, people have been spoiled with such an easy to use interface. Bitcoin will never be adopted by the masses unless an equally simple and easy to use interface is put in place. Bitcoin ATM’s do exist, and companies online like Bitpay are available, but these do not attract your average consumer.
Third is government approval vs privacy:
Various governments around the world have varying opinions on the use of Bitcoin. More progressive thinking governments view Bitcoin as a virtual currency, and taxable under capital gains if traded for profit, and subject to sales tax where applicable — if used to buy white market goods and services.
There are some strong Bitcoin advocates that believe Bitcoin and blockchain technology in general can and will eliminate many of the functions of government, simply because blockchain technology removes the biggest flaws in the current system: human nature and human error. These blockchain advocates aren’t wrong, but getting rid of the first one (human nature, i.e. corruption) would be like pulling rotten teeth from the mouth of a crocodile.
So for Bitcoin and other cryptocurrencies to gain wider adoption in our present day as an actual currency, there would have to be public certainty that accepting or spending Bitcoin at a store or online won’t result in them being arrested or getting in trouble. Without that reassurance, adoption is greatly hindered.
The alternative is more built-in privacy. Bitcoin is somewhat anonymous, but not really. The public ledger is permanent and publicly accessible. If you have a wallet that someone knows is yours, every transaction ever made with that wallet is now traceable back to you, and any other wallet you transacted to or from.
There are newer and better cryptocurrencies that are completely untraceable by design, but that still doesn’t mean anything if you were to use them as a currency on the white market (basically any goods and services that are taxable), which means no mainstream or wide-scale adoption as a currency.
Luckily, not all cryptos need to be a currency, at least in the sense of being used as money. Ethereum (and Ethereum clones) for example, serve a more noble purpose, in that the Ethereum blockchain technology acts as a global virtual computer, capable of being used for smart contracts and other applications. While currently being used for a lot of ICO (initial coin offering) startups, these token sales are merely scratching the surface of Ethereum’s potential.
This is where a lot of confusion exists about cryptocurrencies and blockchain technology. Average people don’t even understand what you’re talking about. Believe me, I know. Bankers just see the “currency” and “investment” aspects of crypto and view the concept as a doomed attempt at something nefarious.
But the future potential of Blockchain technology is absolutely insane. There are whole sectors of the market that don’t even exist yet, but will, that will utilize blockchain technology to advance how we communicate and interact in business and in social life. The internet in it’s current state is a mere infant compared to what it will become with decentralized computation and trust enforcement. We live in a society where being secure means being hidden. In the future, it will be the opposite, where the blockchain will guarantee you are not being deceived or ripped off. Stealing someones identity will be nearly impossible. Not meeting the requirements of a contract will be determined by binary conditions. Someone like Donald Trump will have to actually pay a contract in full, or it will be publicly shown to the world that he ripped a subcontractor off, and forever view-able in a public ledger.
So in my mind, Bitcoin and other cryptocurrencies are not anywhere near their potential. Its an entire ecosystem that is superior in every single way to every current system in place: government, law, finance, business, you name it. corruption and mistakes are removed so that people don’t need to trust each other (by needing to store everything in vaults so to speak), because the system enforces trust at every level where it’s needed in human interaction.
For some, this sounds frightening. But they need to remember that this is a decentralized solution, where no corrupt central authority is involved. Tomorrows black market will be today’s white market. ponder on that for a while, the implications are staggering.
By Frederick Briggs, who studied Systems Analysis & Computer Science at Canadore College. Originally published on Quora.
For more trending tech answers from Quora, visit HackerNoon.com/quora.
