Today is a good day to talk about bitcoin, the notoriously volatile cryptocurrency everyone is talking about. Bitcoin has gone up and down over the past few years, but it’s currently having a terrible time. The bitcoin price recently plummeted from $19,000 to below $6,000 in less than two months. That’s not great! But even if you don’t core crypto about the price of bitcoin, and I promise you that most people don’t, you can still learn something valuable by exploring how it works and what problems it might face going forward. So let us begin:
Bitcoin uses a lot of energy
Another massive problem with bitcoin is its use of energy. The energy required to run the bitcoin network is immense and growing. Bitcoin mining alone now consumes more electricity than in 159 countries. It uses more electricity than all the world’s nuclear plants combined.
So why does bitcoin need so much power? The answer lies in a complex system called “mining.” As we said earlier, miners build computers to solve math puzzles and compete against each other by solving these puzzles faster and faster (and making even better computers). So miners compete for bitcoins by solving these problems; whoever does it fastest gets rewarded with bitcoins for their troubles (or rather, for their effort). And this is where all that electricity comes into play: To ensure everyone has an equal shot at winning those rewards from solving these problems, miners have to work as hard as they can. This means using as much energy as possible without breaking any laws or getting caught doing something illegal, like stealing electricity from someone else’s house by running wires through their windowsills like some mad scientist/electrician hybrid (which sounds pretty cool).
It is too late for governments to stop bitcoin.
Bitcoin is a global currency, making it impossible for any government to regulate it completely. That’s one of bitcoin’s biggest strengths. It’s decentralized and international. So any single entity or government cannot control it, and no one has control over its supply or regulation.
But what if a dozen countries decided at once to ban cryptocurrencies? How could they possibly stop people from using them? The answer is: they can’t. Anyone who wants access to cryptocurrency can find ways around the bans, and there are plenty of ways these days! For example, you could use online exchanges, like those offered by Coinbase or Kraken, trade locally with another person in person, and purchase goods directly from merchants who accept bitcoin as payment (like Overstock). Buy gift cards for retailers that accept digital currencies, or even get paid in digital coins for your work.
Bitcoin is not a good store of value.
Let’s start with the most obvious: bitcoin is not a good store of value.
The value of any currency is determined by its supply and demand. The more people use it, the more valuable it becomes. However, if lots of people want to buy something with bitcoin, then its price goes up, which means fewer people will be able to afford whatever they’re buying (aside from some selected luxury goods). It’s a vicious cycle, and that’s before we even get into the volatility issues.
If you have your life savings in bitcoin and then wake up one morning to find that half your stash has disappeared overnight due to a crash or hack attack on an exchange where you bought it. Let’s say you’ll probably be looking for somewhere else to spend your money next time.
It might be too late for bitcoin already.
Bitcoin is still a very popular cryptocurrency, and it has a high value (currently $6,000) and market cap ($60 billion). It’s used by many people, businesses, and countries, but could this be its downfall?
Bitcoin may fail because too many people are using it. The more popular something gets, the more likely it is to die. Think about how many people bought bottled water when they were sick or on vacation and then threw all those empty bottles into landfills! That’s why we need to think about how our money works for us instead of using cash just because everyone else does.
There are much better cryptocurrencies
You may have heard that bitcoin is money’s future, but that’s not true. Instead, there are better cryptocurrencies, and they’re poised to take over the world.
Bitcoin has limitations. It’s slow and expensive to use, not to mention highly energy-inefficient compared to newer cryptocurrencies like Ethereum (which can run complex applications on its network). The more people who use bitcoin as their primary currency, the harder it becomes for all those transactions to be processed quickly enough. And as long as there are only 21 million bitcoins in circulation (which happens around 2140), there will never be enough coins available for everyone. If you want more than a couple of dollars worth of bitcoin today, you’ll need to pay a hefty fee for your transaction to go through within roughly 10 minutes, and even then, it may still get stuck in limbo!
This means that if you want someone else to send you money on Bitcoin right now. Good luck getting them to do it anytime soon!
Bitcoin may not be the future
If you’re still in the market for a cryptocurrency, I would recommend Ethereum. While it has its drawbacks, it’s not as decentralized or secure as Bitcoin and doesn’t have the same level of brand recognition. Its smart contracts make it more attractive for developers than its older cousin. It could also solve some of Bitcoin’s scaling issues (slowing transactions). Suppose you want to invest in something that might be worth something someday; maybe try out Litecoin or Monero instead. You can also use your hard-earned cash to purchase goods and services from someone who accepts them as payment; ask your nearest bartender if they take dollars…or whatever currency is currently legal tender where you live.
Conclusion
So, is bitcoin doomed? Well, maybe. It’s hard to say for sure. We know that the technology behind bitcoin has severe potential, and many other cryptocurrencies could replace it if necessary. Some might think this article was written to predict its demise or even help it along (I assure you it wasn’t). I believe that there are still plenty of reasons why people will continue using bitcoin and other cryptos in the future despite all their shortcomings – especially when compared with traditional currency systems such as banks or credit cards. This offers little transparency into where our money goes each time we swipe our card at a store checkout counter without knowing where those funds end up being spent!
