problems with cryptocurrency like Bitcoin
Hello friends, in today’s article, we see the problem with cryptocurrencies like bitcoin. so if you know this problem, then you understand the whole technology, and how it works. so let’s start
Problems with Bitcoin:-
let’s understand one by one
1) Scalability:-problems with cryptocurrencies like Bitcoin
In Bitcoin 1 block size is 1 MB means in 1 block we fill that many transactions we have that much capacity. In 1MB 2000-2500, transactions in 1 block and so 1 block created after 10 minutes means the transaction speed is about 34 per second.
But in VISA and Master Card, the transaction speed is about 5000-10,000 transactions per second.
In Bitcoin, transaction speeds are overly slow than existing technology. So what’s the benefit of new technology that has less speed than a current transaction?
and also 3-4 transactions per second are only the virtual number. In bitcoin, nothing happens in a second. On block transaction put after 10 minutes. so whatever 2000-2500 transaction is executed after 10 minutes.
and also said that after the transaction needs 1 hour. means 10 minutes for your 1 transaction and waiting for 4 to 5 other transactions is equal to 1 hour. (problems with cryptocurrency like Bitcoin)
So transaction is very slow on those day trading volume are more than day one transaction takes up to 16 hours to add in the block.
let’s talk about Transaction Fees:-
Normally a bitcoin transaction fee works like this, If I want to sell a bitcoin, I put a transaction and give some bitcoin as a transaction fee to a minor.
and minor only do transactions of those people they give maximum bitcoin as transaction fee.
when lots( 1 million) of transactions come at a time, and in the block, we can add only 2000-2500 transactions. in this scenario, those give the maximum transaction fee that only transactions add to the block at first.
Normally fees for bitcoin transactions are 50 cents to 1 dollar, but the trading volume is big. then the fee is about 55 dollars at this time giving a transaction fee is not possible.
e.g. For 50 dollar transaction amount, I can’t do 30 dollars as a transaction fee and not wait for 16 hours.
so this is a big problem in bitcoin.
Lack of Privacy:-
Bitcoins don’t have privacy.
Blockchain technology is public:- so any new person a see the history of all transactions happening in the bitcoin chain.
and also see which account has the maximum bitcoin, but the account number is kept secret. but if a powerful person wants to see, this account has that much bitcoin, which person has this account?
e.g. in the USA, the Income Tax department takes the personal data of the person, their account number their main address from the crypto exchange.
On Exchange, we do KYC, so they have our data. If any person can hack the exchange, they can get all information of the account number of bitcoins, the person’s name, etc.
or Exchange employee can steal their data, or an outside person by pressuring the exchange can steal the data.
Blockchain is like a Glass locker( like a transparent safe), anyone can see how much bitcoin has ( in their account) but not a personal name, that has their locker, they only know by the private key. (problems with cryptocurrency like Bitcoin)
So in this problem, if someone knows in your locker, and has 100 bitcoin, then a bad person come to your home and by pressurizing you, can take your all bitcoin by using your private key,
3) Hidden Centrality:-
by seeing as an outsider, you see bitcoin is actually decentralized, ( you can read this blog)
4) Harsh Security Model:-
The bitcoin security model is very harsh because on security we use only private keys.
private keys like an ATM pin so those know the ATM pin. those who have an ATM pin can withdraw all money.
But in a bank case, if you forgot the pin then the bank gives you another pin.
if you forgot the private key, then all your bitcoins are permanently gone means you can’t trade them without your private key. (problems with cryptocurrency like Bitcoin)
One reports says, 30% of Bitcoin’s private key is forgotten by people.
5) Harsh Costs:-
Bitcoin mining really expensive
to solve the hash puzzle is expensive because it takes high electricity to run big hardware to solve the easy hash puzzle.
this electricity per year, is more than the more countries, that required electricity in one year, countries like Newzealand, Geese, Portugal
But the hash puzzle is the only thing that makes bitcoin safe and secure
So to solve the hash puzzle, you have to repeat things to get a particular hash value.
so people increase their hash power and upgrade their hardware.
so that effect, they take maximum electricity to run that hardware in the previous 3 years, the power required 9X more as compared to 2017. (problems with cryptocurrency like Bitcoin)
so these are the problems, we have with bitcoin.