No matter how revolutionary Bitcoin has been since it was created in 2009, it still faces its fair share of problems, some that are only getting worse as it grows and creates bottlenecks. Let’s take a look at some of the main issues
It’s not easy to understand
This makes mainstream adoption very difficult; a crucial step in the development of the entire cryptocurrency industry. Some online retailers are accepting bitcoin transactions, but unfortunately, widespread adoption is still a long way off.
High transaction fees
Because there are limited miners and limited space in a block, a fee is attached to motivate miners to prioritize their transaction. As the bottleneck of waiting transactions increases, people offer higher and higher fees. According to data by Bitinfocharts, an average BTC transactions costs around $0.3, but it went up as high as $30 per transaction back in 2017.
Scalability and transaction speed
Blocks on the bitcoin blockchain are limited in size (1 megabyte) and frequency as the block creation time is 10 minutes. Approximately 2,000 transactions can fit into one block. This block size limit creates a backlog of transactions, creating delays and increasing transaction fees.
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The average transaction time takes over 10 minutes, but it is recommended to wait for at least 3+ confirmations before labelling a transaction as secure. This takes too long, especially for everyday retail transactions and only gets worse as more people use the network.
Technical risk of a 51% attack
While the technology behind cryptocurrency is supposed to make it extremely secure and stable, there are still ways to challenge it. Although hypothetical at this stage, if miners controlling the majority of the network attacked the blockchain, they would be able to prevent new transaction verifications, stop payments, reverse transactions and double-spend coins.
Requires expensive software
Mining Bitcoins requires high-end computer hardware and intense energy usage. The power needed for mining has continued to increase. The hash rate (computing power) at Ten tera hashes per second means the network performs 10 trillion calculations every second.
Which consumes between 491 and 766 kilowatt-hours and emit between 233 and 264 kilograms of Co2.
Need consensus
Everything has to happen by consensus. Although this is a good thing because it makes transaction verification very secure, it also means that moving forward and resolving issues can be time-consuming and lead to further problems unless everyone agrees.
The Future of Bitcoin
The entire cryptocurrency industry is still very much in its early stages, and it’s clear that many issues need to be resolved before widespread adoption can happen. Cryptocurrencies, including Bitcoin, face several challenges beyond the technology, including the ongoing threat of government regulations that could ban cryptocurrency in certain countries.
Bitcoin may not currently be fulfilling the role that it was initially set out for, but it gave us blockchain technology and the innovation behind the entire crypto ecosystem. Bitcoin remains to be the most widely adopted and recognized cryptocurrency across the market despite its drawbacks.
Besides, it’s difficult to predict what direction Bitcoin will take as software developments are continually being worked on and implemented to try and fix some of the issues mentioned above. For example, an update called the Lightning Network which uses micropayment channels that propose to solve the problems with scalability, energy usage, transaction fees and speed.
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