Bitcoin, digital currency, became popular in very short span of time due to quick payment options. Dealers of digital currency all over the world welcomed bitcoin with open arms. But with the passage of time some drawbacks were detected in the currency. 3 major problems were found in the digital currency which damaged the worth of Bitcoin.
Following 3 major drawbacks of Bitcoin generated a bad word of mouth about use of digital currency.
1.Waste of Energy
Mining of bit coin involves producing new coins and surety of secure payment networking. This process involves excessive use of energy which harmfully effects the environment.
Mining of crypto currency is power hungry. Specialized computers are attached in Bitcoin mining process. They are designed to verify those transactions which are made by the people involved in selling and buying of bit con.
This process is comprised of solving puzzles. Moreover this whole process provides barriers to ensure that no fraudulent activity is being done to edit the global record of these transactions.
Tempted by their increased profits people connect a large no of miners to the network- sometimes even entire warehouse full of them.
This whole process consumes a lot of energy as the computers are more or less constantly working to sort out these puzzles.
Elon Musk, CEO of TeslaTesla, states last month that its electric cars manufacturing concern is not going to accept any payment in bitcoins unless process of mining becomes energy-efficient. This statement of Musk led to drop the 5% value of currency within no time.
Cambridge Bitcoin Electricity Consumption Index shows that power usage only in Finland and Switzerland in mining the digital currency is more than the entire power usage of these countries.
A research conducted by “university of Cambridge Bitcoin Electricity Consumption Index” shows, mining on average consumed 121.36 terawatt-hours a year.
Stats by this online tool reflect that Bitcoin mining consumes more electricity than whole of Argentina.
Similar was the case with Netherlands and United Arab Emirates (UAE) where 108.8 TWh and 113.20 TWh were used respectively. Energy only consumed by mining could be used to power kettles in UK for 27 years.
This enormous consumption of energy leads to increase in C02 production in the environment which alarming for environment.
2. Lack of Security
The main idea behind evolution as well as introduction of digital currency was to develop pseudonymity during transactions. It involves hiding of actual identity of a buyer.
But in case of frequent transactions, it becomes possible for cyber-criminals to link physical identity with digital. Security concern was ond of grave concern in 3major problems of Bitcoin.
Hackers can easily trace the transaction details and misuse them for corrupt practices. Evidently US law enforcement department was able to recover digital ransom amount of 2.3 billions USD from a group of cyber criminals.
3. Slow and Cumbersome
Prasad, professor of Cornell University says. “Value of bitcoin is very uncertain as markets are very volatile.”
30% plunge was noticed in a single day in month of May which shows “a make or break” for the speculators involved in digital transactions.
Conclusively, some competitive digital currencies like “Zcash and Monero” are being considered as better alternatives of Bitcoin in some aspects. But David Gerard, author of Attack of the 50 Foot Blockchain is of the view, “So more efficient mining hardware won’t help – it’ll just be competing against other efficient mining hardware. “