Digital currency is booming in the world right now, Transfer of money is everywhere, and digital currency makes it better. According to the data, Digital currency hold around $130 Billion of market cap. Bitcoin circuit holds a more significant portion of its $70 Billion, so what this currency works on is a technology called Blockchain. Few reports state that by next year, this blockchain technology will hold around 10% of global GDP. Now we know there are a lot of benefits of blockchain technology and digital currency.
There are benefits of having Digital currency, but there are demerits to it as well. Let us see what the difficulties Digital currencies face are.
Extensibility – There is an obstacle towards growing and have a scalable environment for digital currencies. That is, the platforms out there who use these digital currencies transact slowly than the existing system which is being used.
Obscurity – The crazy thing about digital currency is that we can’t see it in front of our eyes. It may be a benefit for some like carrying millions of legal money in the account. But for some who deal with illegal money, it’s easy for them to launder it. Make it white so that the government can’t catch them.
Inconsistency – Digital currency like Bitcoin circuit, the value of them fluctuates all the time. There’s no fixed amount of digital currency out there, which makes it difficult for traders to trade In them.
Let us talk about them in detail.
If we talk about a transaction that happens per second all around the world that is around 2500 per second, which is a lot for digital currency like Bitcoin to handle, Bitcoin can handle about 3 to 5 transactions per second this indicates that bitcoin is not ready for the global market right now. The slow process depends on the process of how this transaction works.
There’s a way to overcome these problems right now such methods include –
Taking a new approach – Bitcoin and other digital currencies should have a unique approach towards how they handle transactions between customers. Getting this new approach will decrease the time of the transaction, and the transaction pers second will increase.
Using a fast Network – Using a fast network here means that the microtransactions that happen between two parties should be done offline and then upload the details of it to the online servers.
Using Sharding – Sharding is a very best-known method to deploy data towards different nodes; these nodes then share various information about the bitcoin; this will increase the speed.
Some of the obscurity of Digital transactions as a threat, and some view it as an advantage, both ways are genuine here, and we are going to discuss both. First, let us look into the factor that the total anonymity of digital currencies provides broad security towards the customers that are using it. In other words, the more anonymous the transaction is, the more secure it is.
Benefits of Obscurity – There are few benefits of anonymity while no one can see our transactions our money, which is saved in digital currencies, is safe. IT also allows us to maintain a low profile, and anyone can buy bitcoin and use it.
Problems with Obscurity – Problems come as much more profound than the benefits as being total anonymous no one knows who is transacting. This allows criminals or illegal money holders to launder their money in the form of Bitcoin.
There’s a way to overcome these problems right now such techniques include –
Adding KYC to Bitcoin – currently, there is no KYC to a Bitcoin registration process, having KYC of the legal format will let digital currencies hold a much better grasp towards this whole new market they are targeting.
We all know fluctuating Bitcoin is if we invest at a more considerable amount and the price of bitcoins go down than out money is flushed. There is no way to know that when the cost of the bitcoin will go up and when it will go down. There is a way to overcome this if we adopt digital currencies worldwide. The volatility will decrease by a considerable margin. This then will allow users to invest more and do digital currency transactions often.
Digital currencies hold a much better future than it is now, we can trust them, or we can reject them; it depends on us. We all have to believe in them; all these digital currencies are working all the time to secure their network. We can surely say that having digital currencies like Bitcoin circuit is a benefit to the world market. Only if all the problems are solved, we all can move towards a secure and more digital future.