If you are like me following the tech world every day, you can be excused for believing that currently huge swaths of world are being invaded by this revolution known as Bitcoin and how it spells doom for current economies. While it might still be possible, there are quite a few challenges that seem to be overlooked. Specifically,
How scalable is the block chain architecture?
It is very easy to think of the block chain as a ledger where all the transactions are recorded and transparent. This has worked well so far with typically a niche set of users. However for Bitcoin to truly transcend the medium of internet and become accepted widely, it needs a significant percent of worlds 7 Billion population to use it. If so many start using it,do we know if block chain technology scale properly and provide authentication with reasonable speed? Even with current users, Block chain has become formidable and Bitcoin underwent a hard fork recently..
The exchange value of Bitcoin - what determines it?
I mean it’s all well to say that the number of Bitcoin is limited. The value of Bitcoin may be decided by the market. But who controls this market? The anonymity offered by Bitcoin is also a favorite recipe for market monopolies. Are there safeguards against monopolistic behavior? At present, I believe there are none.
What happens when there is a black swan event?
Bitcoin is the currency for the connected world. It thrives off the internet. Bitcoin might offer decentralized transaction processing. But the internet in which this processing is done, is hardly a decentralized architecture. In times of natural calamities, how will a bit coin retain its transaction record? If a significant number of its miners are disrupted, will Bitcoin be still able to work well for transaction authentication?
These issues will need to be sorted out before Bitcoin can assume a transformative identity. Until then, it will still be around. But only so much!!
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