We all know about the benefits and unique features of cryptocurrencies. In fact, cryptocurrencies introduced to the world in order to revolutionize the banking and financial system. Since then many institutions and governments realized the potentials of blockchain technology and cryptocurrencies. what is clear in this stage is that people still keep using fiat money as medium of exchange. Actually, they do not look at cryptocurrencies as a future of money yet. They mostly take it as an investment option to invest long term or even trade cryptos and make profit. The reason is that cryptocurrency world still have various issues, which didn’t allow it to shine and replace the fiat currency. In this article we are going to talk about cryptocurrency challenges to become the future currency.
Cryptocurrency challenges to become the future currency; fiat currency will finally be replaced by cryptocurrency
The new digitized world revolution in banking and financial system is inevitable. Cryptocurrency has features such as reliability, efficiency and fast transactions, which makes it a suitable choice to edge out fiat currency. The fact is that cryptocurrency has to overcome challenges in order to be eligible to replace fiat currency. Below are some challenges that cryptocurrency is facing with in order to become the standard medium of exchange.
Governments and their related regulatory institutions are one of the biggest challenges that cryptocurrency is facing with. Some governments banned cryptocurrency so far and it was a major obstacle to make cryptocurrency as a globally accepted medium of exchange. In addition, the taxation process is complicated because cryptocurrency is separated from traditional banking system.
Public point of view
Since bitcoin appeared and introduced anonymity of transactions to the world, many people started to use it for illegal activities. For a while, cryptocurrency was famous for using in dark web. In addition, we hear in news a lot about the hacks and scams or frauds, which are happening in crypto world. As a result, the public perception about cryptocurrency is far beyond what it has to be. Many people still think to cryptocurrency as of scam or fraud or even the currency which is dedicated to illegal activities. So, if, cryptocurrency wants to become the standard medium of exchange, it has to change the public perception about itself.
Bitcoin mining has high energy consumption
As we talked about on Wallebi, Bitcoin transactions verify by miners. In fact, miners confirm transactions and store them in “blocks of information” on the blockchain. Consequently, mining is a complex process with high electricity consumption. The University of Cambridge estimates that Bitcoin mining process consumes 0.21% of the total electricity produces in the world. This amount is equivalent to the total electricity consumption of countries such as Romania or Bangladesh.
Cryptocurrency Challenges To Become The Future Currency; Bitcoin scalability
Scalability is the issue that Bitcoin is facing from the early days with. Bitcoin network designed in a way to process 7 transactions per second. As a result, the network doesn’t have capacity to process the requested transactions fast enough. The usage of cryptocurrencies, especially for Bitcoin is expanding day by day. So, it requires more capacity in order to process all the requested transactions and be fast enough to use as a medium of exchange.