What Will It Take for Bitcoin to Become Widely Adopted?
As Bitcoin enthusiasts, it is essential to effectively communicate the concept of Bitcoin and cryptocurrencies to the general public. In doing so, we can counteract the negative rhetoric aimed at Bitcoin and other crypto assets by influential figures.
The Challenges Hindering Bitcoin's Frequent Use
There are three primary challenges that hinder the widespread adoption of Bitcoin as a digital currency:
Unstable Value
Bitcoin's value is inherently unreliable and highly volatile. Unlike traditional currencies, such as the U.S. dollar and the euro, Bitcoin's value fluctuates dramatically on a daily and yearly basis. This instability makes it unsuitable as a reliable store of value or medium of exchange.
Since its inception in 2009, the price of Bitcoin has undergone numerous significant fluctuations. For instance, after hitting a high of 1150 in November 2013, the price of one Bitcoin fell to 500 by mid-December 2013 and took four years to recover. In 2017, the price surged to 19,000, only to drop by 83% to 3,200 by December 2018. By 2021, the price reached 63,000 but quickly plummeted to 29,000 in July. As of November 2021, the price peaked at 67,000 and is now around 31,000. These dramatic price swings render Bitcoin unsuitable for everyday transactions, as large fluctuations can significantly affect purchasing power.
Slow Transaction Processing Speed
Transaction processing speed is another significant drawback of Bitcoin. The blockchain technology that makes Bitcoin secure and tamper-proof is designed to prioritize security over speed. As a result, the network can only process about seven transactions per second, which is far slower compared to traditional payment methods like credit cards, which can handle up to 1,700 transactions per second.
While the slow processing speed is a critical factor in maintaining the security of the blockchain, it leads to longer wait times for transactions. This makes Bitcoin less practical for everyday use, especially for users looking for quick and efficient transactions.
High Transaction Fees
Transaction fees have become a significant barrier to Bitcoin's adoption. These fees were introduced as a mechanism to prioritize transactions by offering higher fees for faster processing. However, this has not addressed the issue of the slow processing speed and the high energy consumption required for blockchain transactions.
The high transaction fees can make Bitcoin impractical for many typical transactions. For instance, a simple transaction can cost several dollars in fees, which can be a significant deterrent for users.
Next Steps and Future Outlook
Despite these challenges, there are ongoing efforts to address these issues and improve Bitcoin's usability. Central banks and regulatory bodies around the world are increasingly paying attention to digital currencies. According to the Bank for International Settlements survey, 10% of all central banks expect to issue digital currencies within the next three years, and even the Federal Reserve is studying this concept.
While Bitcoin may eventually gain traction and align more closely with its original vision of a global, decentralized currency, it is currently more of an asset whose value fluctuates wildly and produces no income. Prospective investors should be mindful that the value of Bitcoin could disappear as easily as the data that supports its creation.
Conclusion: Bitcoin's journey towards widespread adoption is ongoing, and while challenges remain, there is a growing acceptance and interest in digital currencies. It will be essential for Bitcoin enthusiasts to continue advocating for the benefits of digital currencies and to work towards enhancing their practicality and reliability.