Bitcoin was the first blockchain-based cryptocurrency. Today, it’s still the biggest cryptocurrency around by a wide margin. However, with the rise of Ethereum and other new competitors, it may not be safe to assume that Bitcoin will always hold its position at the top of the cryptocurrency community. The Bitcoin future is an uncertain one.
Not all of Bitcoin’s threats are external, either. Bitcoin has some serious problems with its implementation and scalability that are manifesting themselves with increasing frequency over the past few years. As Bitcoin’s price, market share, and adoption grow, it’s pushing the limits of the underlying blockchain technology that Satoshi developed to run the platform back in 2008. Coming up on a decade of existence, Bitcoin stands at a crossroads, and the future of Bitcoin depends on the decisions of the community and development team over the next few years.
Bitcoin in the Future: A Bubble or the Future of Everything?
When it comes to Bitcoin’s future, there are two basic camps: the enthusiasts and the skeptics. The enthusiasts believe that Bitcoin is on the brink of worldwide adoption. They argue that Bitcoin’s value will continue to rise as blockchain technology supplants traditional banking systems. Over the next 10-15 years, many of these enthusiasts believe Bitcoin will replace banking with one global currency system.
While Bitcoin certainly has the potential to be disruptive, skeptics think the chances of a full-scale blockchain-based banking revolution are slim. Many believe that Bitcoin’s usefulness doesn’t warrant its current price, and the bubble will burst, causing investors to lose billions of dollars overall. A recent article from The Street reminds investors that it’s still very risky to own Bitcoin, and a selloff could happen in the face of new regulations or competitors. Here are some of the skeptics concerns:
1. What Can You Physically Buy with Bitcoin?
One major problem with Bitcoin, according to John Wasik at Forbes, is there’s no real use case for the currency yet. Outside of specialty shops and dark web vendors, Bitcoin adoption hasn’t taken off. You can’t buy a sandwich or pay your rent in Bitcoin yet. Until you can, according to Wasik, buying Bitcoin is mostly speculation, not an investment.
Bitcoin enthusiasts will point to the recent increase in the number of people using Bitcoin, and Bitcoin’s new SigWit technology is hoping to answer the demands of millions of transactions. Stores are increasingly accepting Bitcoin, and some developing economies like Venezuela are relying on Bitcoin to provide economic stability.
2. Changing Regulatory Environment Threatening All Cryptocurrencies
There are two problems that combine to create one big regulatory hurdle for Bitcoin. The first is that governments want to be able to track the movement of money for the purposes of stopping money laundering and tax evasion. Cryptocurrencies make that much harder. Additionally, treasury departments and central banks will not want to let go of their regulatory controls over the nation’s economy.
The second problem is banks and financial institutions have a lot to lose if Bitcoin takes over. You can expect the full might of the banking system, including lobbyists, to stop Bitcoin implementation. However, banks can also see the benefits of blockchain technology. Recently, several major banks announced they’d be launching their own blockchain-based banking system and transaction verification. According to one Harvard professor, the regulatory hurdles and power of major banks is the biggest reason why Bitcoin won’t succeed long term. It’s not clear how Bitcoin will overcome this obstacle.
3. New and Nimble Cryptocurrencies Could Take Over
Bitcoin has a big scalability problem. Its block size is too small to accommodate all the transaction requests it receives. As a result, new transactions either have to wait to be processed or pay a fee. Long term, this is untenable as you can’t be expected to wait around at a coffee shop for 30 minutes while your Bitcoin transaction is verified.
Bitcoin competitors built on more scalable platforms could come along and topple Bitcoin in the coming years. Bitcoin Plus, a new currency, already promises 1 minute block times. Another new entrant, IOTA, is making waves with its infinite scalability by using a different cryptographic ledger instead of the blockchain. These or other new currencies could topple Bitcoin. While Bitcoin still holds a huge lead in market share, it will need to address the scalability problem if it wants to hold that lead.
Bitcoin Future: Leading the Blockchain Revolution, But Can It Hold On?
Bitcoin has shown incredible gains since its inception and holds great promise for the future if it can fix its scalability problems. However, more obstacles face the future of Bitcoin, and it’s up to individual investors to decide for themselves if owning Bitcoin is a bubble or the beginning of the future. This article has presented some threats facing Bitcoin, but if the community can navigate those threats, Bitcoin is poised to be one of the biggest revolutions in finance.