Bitcoin- A Critical Analysis

Bitcoin

The vitality of money exchange has always been unquestionable but the liberty certainly has been questioned numerous number of times. Any transaction made with physical currency seems the most secure and most anonymous yet we are well aware of the fact that it is not possible in all the situations. With extensive growth of the internet market and online payment options to avoid third party hindrance or interference in form of support is unavoidable.

To fulfill this requirement of non-hindered transactions with the omission of any mediating charge taken by the third party who alters the value being transacted along with the facility of reversible transactions the need of crypto currency becomes important and this was always the major reason for the introduction of the game changer-“Bitcoin”. However analyzing bitcoin for its future progress and implications is very important from investors’ and business point of view. Here are certain aspects of bitcoin that one should be aware of –

Anonymity: Bitcoin is popular in the market due to its ability to lead to non-linkable unrestricted transactions through the public keys. These keys are issued uniquely for each transaction and thus keep the identity of the person safe but the problem is that in case a change is issued to oneself the same transaction can consist of two keys. To solve such issue researchers have come up with tools called mixers which intent a providing a different coin of different signature with the same denomination to avoid linking.

Loss and theft of coins: With ever rising value of the bitcoins it’s important to keep them safe, there has been an instance of malware attacks on wallet which has led to such loss of bitcoins and also human error such as uploading the wallet data on random cloud can also lead to loss. Several measures are present including multiple password encryption type methods that can be used for the purpose.

Volatility: Recent phenomenon has shown that bitcoin is similar to any bubble as soon these novice investors come to know about such opportunities sometimes they overvalue the same so that it leads to a sudden downfall in the value. Can such actions lead to the end of such currencies? Yes they can .Researchers also claim the fact that such uncertainties are the major reason that can lead to its failure in the market.

Criminal uses: Bitcoin’s pseudonymous behavior has made it popular on online networks such as Tor where it is being used to make payments for illicit services and goods. Another major concern is money laundering. There are people who are completely against this process of transaction due to such high criminal activity risks but people with an altogether different view point are looking for solution in government regulation which might both control yet stabilize this innovative method of transaction.

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