Despite the worldwide popularity and mass adoption that bitcoins are having in recent times, not all about them is perfect. They faced a lot of criticism in many parts of the world and were considered a scam due to several negative factors. Despite improvements and the experts from various sectors that have understood the power of digital currencies, looking at them in more a positive way, they still have their setbacks.
Here are the most important ones:
Degree of acceptance
Many people are still unaware of Bitcoin. More and more businesses accept bitcoins because they want its advantages, but the list remains small in comparison to the sum of web transactions and still needs to grow so they benefit from network effects.
Volatility
Bitcoin prices are volatile; they increase and decrease at a very high pace. This can be especially risky for betting, as the price of a Bitcoin amount compare to other currencies can rise or plummet overnight.
Still in development
Bitcoin software is still in beta stage, with many incomplete features in development. New tools, features, and services are being established to make it safer and more accessible to a wide public. Most Bitcoin businesses are new and still offer no insurance.
Possible Government Interference
Some governments may not take away your Bitcoins, but surely can ban it in the country. That forces bitcoin wallets and companies to shut down. If this happens, the bitcoins wallets are freezed and access to them may become difficult.
Deflationary
A possible negative factor attached to Bitcoin because of being deflationary is that, if it gets in the hands of speculators, a recession may come to this currency. Bitcoins are limited in number and if the major chunk is held by speculators and investors, they will hold it for a longer period and won’t release it in the market. When supply decreases and demand continues to increase, it will raise the price of Bitcoins and then the speculators benefit.
Lack of recourse
If you lose the wallet which had bitcoins stored in it, you have lost them all. You cannot regain it and they are simply lost (orphaned) forever. As Bitcoins is decentralized and no one has full control over it, there is not anyone to call.
Money Laundering/Black Market
Bitcoins were used for money laundering and people operating in black markets on start, as it allowed to hide their personal information and get payment secured. In money laundering, intermediaries would collect money from one source and transfer it to another source using Bitcoins.
Despite the risks and challenges, Bitcoins are starting to be recognized in many countries. UK and US have been using Bitcoins smoothly like Fiat Currencies. On April 1st, 2017, Japan recognized Bitcoin as an official mode of payment and implemented tax policies on it as well. In the other hand, using Bitcoins in Russia was banned and could have jail penalties, but it was announced that this country may legalize Bitcoins by 2018.
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