“It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen” highlights the list of core objectives unveiled by Bitcoin, the pioneer of cryptocurrencies. In general understanding, Bitcoin paved the way for a new pedagogy of sending and receiving payments via virtual currencies that are operated and managed on a distributed ledger known as the blockchain. It facilitates the instant transfer of money across the globe through a secured, transparent, and immutable interface and that too in an economical manner. The leading crypto coin has been widely used by entities and individuals for money settlement over the years, though Bitcoin becoming a mainstream currency still appears to be a far-fetched dream for all the crypto lovers around the world.
Interestingly, despite the growing popularity of cryptocurrencies, not everybody owns or deals in them because of a wide range of limitations attached to the virtual currency space. As cryptocurrencies are comparatively new to the world, investors do not have sufficient knowledge about the core concepts, theories, and mechanisms involved there. Bitcoin mining involves solving complex algorithmic calculations in lieu of rewards or new Bitcoins. The process is highly complex and requires detailed knowledge about technology. These complexities often restrain investors from trying their luck in cryptocurrencies.
Apart from the drawbacks mentioned above, cryptocurrencies are also highly volatile, which implies that the price values fluctuate significantly in no specific time. Bitcoin has seen its share of ups and downs since its launch in 2009. Where the bullish trends surged its sales, a bearish market led to plummeting rates. As per the latest reports, BTC is fast heading downwards towards its near-term support at $7,700 after rolling for a value of $8,000. The bearish trend is likely to continue further and deepen intensely with the coin witnessing a potential drop to lows of approximately $4,000 in the future. However, this significant drop can be directly linked to the global recession, which is likely to set in post the COVID-19 outbreak, which has crippled the global economy. Such huge variations are not visible in other currencies, which are more than likely backed by governments.
The Bitcoin price at the time of writing this article was $7,295.58, which was lowered by $103.24 after recording a downfall of 1.39% in the past 24 hours span today. This article will give an insight into the core issues related to Bitcoin, which restricts its mass adoption across the geographical boundaries. Have a look:
- Significant and Irregular Fluctuations
Bitcoin has witnessed an array of unexpected price movements over the years. In 2017, the coin stood at its all-time high of nearly $20,000 mark. Owing to high volatility, the price dropped drastically in 2018, steeping the value down to a shocking score of $4,000. A series of crashes hit Bitcoin price during the year resulting in a major downfall. The volatility rate in 2017 was around 7.7%, which at present is above 10%. These irregular fluctuations are a major shortcoming for the mass adoption of Bitcoin.
- Long run can be a serious issue
The creator of Bitcoin launched the currency to make it a payment option for day to day transactions. In contrast to this, the latest reports suggest that the currency has instead transformed into a digital version of secured assets like gold. The coin is widely traded on exchanges rather than being used for meeting everyday payment requirements. The exchange transactions constituted a whopping 89.7% of all the Bitcoin transactions executed between January and April in 2020. This can be seen as a troubling issue for the long-run success of Bitcoin.
- Dubious status of Bitcoin
“Bitcoin is the leader today, and may continue to be the leader due to having the largest network effect and ‘brand,’ but I don’t think Bitcoin itself will ever be ‘money,” remarked Jeff Dorman, the Chief Investment Officer at Arca through an email. The statement clearly signifies the uncertainty prevailing around Bitcoin and other cryptocurrencies amongst the biggest industry names. Bitcoin is a virtual currency and operates on a blockchain network. It can be seen as a potential payment mechanism, but it is not likely that it will ever be seen as a replacement for cash and other modes of payment.
- Governments’ take on Bitcoin
Bitcoin runs on a blockchain network, which eliminates the need for the interference of an intermediary or a third party for validating the transactions. All the participating nodes have equal access to the network without any bias. A lack of intermediary fails to build trust for Bitcoin in the purview of government institutions and financial regulatory bodies. They often consider cryptocurrencies to be favoring illicit activities such as terror financing and fraud. The lack of government support, trust restricts the mass adoption of cryptocurrencies immensely.
Bitcoin has entered its eleventh year of operation in 2020. The year is likely to turn out to be a breakthrough for Bitcoin as the virtual currency is all set to witness BTC Halving in the coming months, which will further slash down the reward rate to 6.25 from the prevailing 12.5 mark. The speculations suggest that the event can boost the price value of Bitcoin if things fall into place, and the market follows the trend similar to the past halving events. It would be interesting to watch how the price and demand of Bitcoin move in the months to come before the year 2020 meets its end. Before that if you want to invest in Bitcoin to make a good profit from it then the Bitcoin Revolution App is the perfect solution for you. Check its review to know more about it.