When the first time it was introduced, Bitcoin seemed to be a promising alternative currency. However, after being around for sometime, Bitcoin controversies remain. It is evident from the fact that the cryptocurrency is not immune from fraud and speculations. As a result, even tech savvy and optimistic people began to question its sustainability and prospects.
It is true that the idea behind an alternative currency is a good concept. However, many things have to be done. Bitcoin still needs to prove its advantages compared to the conventional currencies. The cryptocurrency is still subject to many harsh criticisms.
Main Reasons Behind Bitcoin Controversies
Before deciding to invest in Bitcoin, you had rather kept in mind some problems that remain regarding this cryptocurrency. The following are reasons behind the Bitcoin controversies.
Bitcoin and some other cryptocurrencies now remain unregulated. As a result, they still stay out of the exchange market. Large banks still depend upon old money system, stocks, commodities, and bonds. They are well regulated and traded worldwide. On the other hand, there are many controversies around its uses in illicit exchanges, thanks to its encrypted transactions.
Of course, the idea on rampant fraud related to Bitcoin is still limited to speculations, but being wary of the virtual currency may save you from unnecessary loss. You certainly still remember the spread of Wannacry ransomware few months ago. The hackers used Bitcoin account, thus making it almost unlikely to identify the owners.
The value of Bitcoin can recede or rise dramatically even to the extent where sky is the limit. For instance, when Chinese officials said their plan to refuse Bitcoin offerings, the price dramatically decreased to $4.000. However, the price might drastically increase even to $25.000. In other words, market system takes a full control over the pricing.
Unpredictable fluctuations of Bitcoin prices happened frequently in the past. People do not invest in Bitcoin as they do with conventional bank saving account. If Bitcoin is to be used for investment, the price fluctuations must not be dramatic.
Since there have not been any regulation regarding Bitcoin, valuations remain a dilemma. Stocks, currencies, or bonds have established valuation systems while Bitcoin does not. Investors cannot predict earnings since there is no price/earning ratio. In fact, connected users and computers across the planet can create a huge market, but in fact, there is no legitimate market without transparency.
Bitcoin involves huge market values, but analysts see the valuation as limited to value perception. This is a dangerous thing when it comes to financial market. Investors cannot depend merely upon perception.
Despite : Bitcoin controversies, savvy and optimistic people certainly agree that Bitcoin can be the next world currency. However, there must be a global agreement on how the currency is valued and traded in the foreign exchange market. There must be local regulations on how local people can invest in it. Unless the problems are properly addressed, the future of Bitcoin as the next-generation currency will still be questionable.