There is no doubt that the cryptosystem looks really promising with lots of potentials to become the upgraded version of the traditional methods of payments. For instance, blockchain technology is being powered through the bitcoin platform. Countries around the world including China are beginning to make plans about getting the most out of such a system. This is really encouraging to investors in the cryptocurrency market.
Here is the problem
Despite all of these potentials which the cryptosystem is promising to offer through these digital currencies, it is important to note that the system isn’t perfect in any way. This is evident in the fact that experts have managed to spot some of its flaws. The more these challenges aren’t looked into, the more these currencies will be struggling to get accepted by governments all around the world.
This post will be aiming to reveal some major challenges that the cryptosystem seems to be suffering from at the moment.
This is probably one of the most notable challenges of this market over the years. It doesn’t seem to be going away anytime soon due to the activities of desperate investors who are ready to make as many profits as possible. The manner in which cryptocurrencies rise and fall suddenly is really alarming. However, the cryptocurrency trading software applications help investors trade efficiently. Go through a brief review on one of the bitcoin software applications namely bitcoin-gator that supports cryptocurrency trading.
According to experts, the major factor responsible for this problem is whales. This is a term used to describe individuals who have very large cryptocurrency holdings. These people devise all kinds of strategies to ensure current market prices are manipulated in their favor. Whales have the ability to increase the prices of these currencies without any kind of investment in the market. At the moment, this is creating a serious problem since they are the only ones benefiting from such changes in price.
ICO schemes (pump and dump)
There is no doubt that ICOs are now a major part of the cryptosystem in recent times. They play a crucial role in the introduction of new tokens into the market. Pump and dump schemes are still a major issue when it comes to the advancement of cryptocurrencies. This is because they can’t seem to be properly regulated at the moment.
When entrepreneurs who are in possession of these tokens want to increase their price, they will do massive speculation. This will then get potential investors attracted. Once they’ve invested, they will immediately cash out thereby leaving these investors with coins that have little or no value.
There has been this unusual buzz about cryptocurrencies at the moment. However, don’t forget there is the problem of scalability which is yet to be tackled. For instance, bitcoins only allow a limited number of transactions every second thereby leading to an increase in the cost of transactions unnecessarily.
Although there are cryptocurrencies that have been created to improve this problem of bitcoin, it is worthy of note to point out that it is still there. For instance, some cryptocurrencies do allow about 10 – 100 transactions every minute. A limitation such as this has made it difficult for established companies to accept the blockchain technology.