Welcome back to our series on everything bitcoin! This is the second post in a three-part series about bitcoin, covering the good, the bad, and the ugly. In this piece, we’ll look at the drawbacks of bitcoin. Want a more positive take? Check out our piece on bitcoin’s pros (here)
Contrary to what some people would have you believe, there are drawbacks to bitcoin. What are the downsides to using this revolutionary technology?
As popular of an asset as Bitcoin is, its notorious volatility can unnerve cautious investors. Bitcoin is designed as a deflationary asset that increases in value over time. However, regulatory crackdowns and consumer uncertainty have led to rapidly fluctuating prices.
When you send a Bitcoin transaction, you cannot take it back. When they’re gone, they’re gone. Bitcoin has no customer service, and it is impossible to Karen the blockchain. This is the basis for Bitcoin.
Uncertain future of regulation
In the early years of Bitcoin, people cherished a romantic notion that it was a foolproof way to squirrel money away from prying governments. It was nontaxable and impossible to regulate, they said. A great way to regain sovereignty over your assets, they said. There are two things that are certain in life, and Bitcoin users can’t escape taxes. Or regulation. Several countries have banned Bitcoin outright, while the rest of them are scrambling to figure out how to tax and regulate it. There’s no way to tell what the future holds for Bitcoin, legally speaking.
It’s a brave new world for crypto users, which can be both good and bad. The lack of precedent is what makes Bitcoin exciting for so many people, and has helped kickstart the crypto revolution. Bitcoin users are definitely on the frontier of something big. Unfortunately, the ecosystem sometimes resembles a saloon in the Wild West during a whiskey-fueled brawl. This was especially apparent during the ICO boom of 2017, when lack of regulation and scruples lead many to get burned. No one can tell what happens next. Prescient and savvy investors stand to make a lot of money, but plenty of people get distracted by fool’s gold.
While a cornucopia of services offer a simplified experience, users often need to pay high fees and relinquish control over their funds to access easy mode. For those looking for more of a say on their funds, things can get complicated quickly. A typo during a transaction can send your coins hurtling off into the void, never to be seen again. Since Bitcoin transactions are irreversible, every action just seems a little bit more risky. Getting used to the addresses and QR codes can take a bit, and public and private keys are not intuitive to users.
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See you next time!