Two UK academics have published a 2018 report claiming that Bitcoin could form part of the mainstream payments over the next 10 years.
The "next step" in the evolution of money is the digital currencies that rely on emerging technologies, such as the blockchain. According to two academics, they are the next phase in money growth.
According to academics and market analysts, digital currencies benefit from increasing usage. "The crypt is now gaining attention from corporations, government and the financial world that is long overdue," said CEO Waves.
Challenges of cryptocurrency to overcome
In order to gain broad acceptance, market analysts have noted that digital currencies would have to address several challenges. Knottenbelt and Gurguc identified six barriers to cryptocurrencies.
An article by Neil Haran, an enthusiast for cryptocurrencies and angel investor, in TechCrunch also discussed variables that are backward, explicitly price fluctuations and triggers.
These industry analysts describe some of the challenges:
Price instability
Price instability for digital currencies is a big challenge. Their ability to act as a value store and as an exchange channel is undermined. Most investors want the cryptocurrencies to be purchased and sold at the best price possible. Any of the key factors of ongoing market instability in cryptocurrencies exist.
Scalability
The failure to scale such digital currencies could easily prevent customers from accepting them. One such example is Bitcoin, the first digital currency to scale.
Bitcoin is intended to handle 7 transactions per second. This is much less than other types of payment such as Visa, which process 24,000 transactions per second. Some market participants called for an increase in block size to increase the ability of the Bitcoin network. Following a lack of support from many suggested solutions, the Bitcoin network has introduced several changes, including Separated Witness and the Lightning Network.
Complexity
The underlying technologies have complicated digital currencies and time and energy investment might be required to understand these technologies. It is important to generally consider products that are user-friendly.
A individual must understand how public and private keys function in order to use Bitcoin. They need to take different steps to acquire and use the digital currency in transactions.
Regulation
Digital currencies' regulatory landscape is quite complex as jurisdictions follow diverse approaches to supervision. This leaves the whole digital currency questionable.
If government officers collaborate to establish universal rules, Bitcoin will be exceedingly difficult to achieve mass adoption. The whole digital currency field is more unpredictable by providing such a highly fragmented landscape.
Hard Fork
Hard forks are frequent modifications to a digital currency protocol. They bring more vulnerability. A hard boundary fork might change this and put a hard cap at 42 million units. Bitcoin has a hard bound of 21 millions of units at any time (21 million units).
Hard forks will theoretically break the blockchain of a digital currency into two and build two competing chains. This can provide users and investors with additional uncertainty.
Incentives
Two academics (Knottenbelt and Gurguc) suggest that developers should think when designing digital currencies how they can use behavior rewards.
For example, the Bitcoin Protocol compensates miners for inspecting transactions, which makes it worthwhile for the advanced hardware and energy costs. Unless rewards are carefully and conscientiously developed, the mechanism would be left open to those users to manipulate.
In conclusion, by meeting this landmark, digital currencies will be able to conquer many main obstacles. Overcome the challenges, which are much more attractive to consumers and investors. They could also generate for everyone involved in the room a better situation.