There is no question that BitCoin is a unique type of revolutionary technology that is working to change the world; however, it isn’t perfect. One of the biggest Issues with BitCoin is the ease-of-use problems that have resulted in mainstream adoption being challenging. Learning more about some of the issues related to this cryptocurrency can be beneficial for those who are inserted in using it now or in the future.
BitCoin is Extremely Difficult to Understand
For many people, the fact that BitCoin is entirely digital, new and complex make it impossible to fully understand. Additionally, many people – especially those in the older generations – can’t really comprehend a currency that can’t be held or touched. They also don’t fully grasp that BitCoin doesn’t come from a bank, government or company. To use BitCoin – in any capacity – a person must have a computer or other device. Additionally, trying to explain the concept of BitCoin to a non-technical individual can leave them confused and uninterested. These are some of the barriers that have led to a slowness in the adoption of the technology.
Unfortunately, the technical complexities related to BitCoin are not going to be simplified any in the near future; however, there is a rather large community working diligently to help dispel the myths about BitCoin and working to provide more education about it. Additionally, there are many businesses and third party services that have been developed to help facilitate the use of BitCoin, such as certain online wallet services.
Users Need to Understand Computer Security to Use BitCoin
In most cases, just one file on a person’s computer is enough to access BitCoin. However, if this wallet file becomes lost or it is stolen, all of the BitCoins the person has are likely going to be gone forever. What’s the solution? Cold storage? Encrypted wallets? For many, the security terminology for BitCoin seems like another language. Trying to learn the best practices for protecting a person’s bitcoins can be quite overwhelming.
There are a number of online businesses and wallet services have been found to offload all of the security requirements from the person using them. Individuals are able to deposit the BitCoins they have with the selected service and not have to worry about securing or backing up their own wallets. However, using the services that are available still requires the person to have a general understanding of computer security.
Also, all of these private sector services are targeted all the time by attackers, with some being hacked and all the users having their bitcoins stolen. The main issues with these type of services is trust. If a person is depositing their bitcoins with another entity, they have to be able to trust them to hold the funds – similar to a bank. The bad news is, there have been quite a few instances of service operators stealing the user’s bitcoins.
The Use of BitCoins is Impractical and Slow for Any Type of Retail Transaction
Once a new transaction has been broadcast to the network, it is visible to the person who receives it in just a few seconds. However, in some situations, it can take several minutes for the entire transaction to move across the network and arrive at the receiver’s connection. This makes it inconvenient for the seller, as well as the buyer.
Also, unless the person making a purchase has agreed to wait for approximately an hour for confirmation of the transaction, the sale of digital and physical items become susceptible to a double-spend attack. This means that a dishonest buyer may transmit conflicting transactions with the same bitcoins at once. One that will pay the seller and the other to pay themselves. As a result, the person selling the item may see the initial transaction may consider that the order has been paid for and then not wait for confirmation. The buyer then has the opportunity to leave with the item. After the second transaction is confirmed, the first transaction is invalid and the seller has become a victim of theft.
The best solution for this type of situation is for a merchant to utilize the services of a third party payment service to handle the processing of transactions. This will absorb the risk of double spend and minimize theft.
There is No Type of Built-In Protection for Consumers
Payment processing services and credit card companies are able to protect their buyers from any type of fraudulent sellers by offering chargebacks. However, if someone buys something with BitCoins there is no type of protection. The transactions that occur are not able to be reversed. This means that the buyer just has to trust that the seller is going to trust. There are some BitCoin users that claim that this is a feature that is not a weakness, but that it just requires that a buyer does research prior to sending someone their money. Additionally, the irreversible transactions will help to protect a seller from the instances of fraudulent chargebacks.
As anyone can see, BitCoins are far from perfect. However, with a bit of due diligence and additional innovation, this may have the potential to become a mainstream currency. Understanding the difficulties and challenges associated with the use of BitCoins can also help a person know whether or not this is something they wish to use. For some, it makes sense, while others may not be sold on this new form of currency that is now available.
Video – BitCoin Problems