The Future of Cryptocurrency

Bitcoin has changed the world in a real great way but there have been security issues with the block chain technology that governs cryptocurrency. Digital transaction is the preferred payment method for illegal activities like terrorism and money laundering. The cryptocurrency industry is very uncertain and can come to an ultimate end if a single person or organization gains control of half the computing power. These people can double spend which would reduce the value of bitcoin. The future of bitcoin lies in the political stability of nations like South Korea that makes it unreliable. Some people are skeptical of the future of bitcoin while others believe investment in cryptocurrency would benefit investors s great deal. B. Research Problem Some people consider Cryptocurrency the fool’s gold in the long run.

Bitcoin is likely to be a threat to the world’s economy that has made most people are skeptical of its future. The regulators have been protecting investors from the possible dangers of cryptocurrency. Discussion Although the bitcoin technology itself is revolutionary, this concept is used for criminal activities many times. Information security specialists have advised investors against this as it is risky for their investment in cryptocurrency. The bitcoin built-in ideas and protocol components are not new but have been known before bitcoin was made public in 2009. For the nine years of bitcoin operation, there was a critical vulnerability when there was a snagging of 92 billion bitcoins. The bitcoin technologists had to roll back a 24-hour financial record that is hectic.

One cannot make or receive any payments until the entire verification and download process is complete and this takes some time. This slow speed means the technology is not a valid payment method in times of emergency. The data cannot be stored on every network node, however, as this would mean clients would have to trust the servers and this lack of trust has been the foundation of this blockchain. There is a 51% risk of the blockchain solutions. If a single person happens to control half of the computing power of mining, that individual can secretively write another different financial history. According to Bonneau, et al. (2015), in the many bitcoin mining pools, the most significant four pools control more than half of all the computing power.

If in some way someone or people gained control of the four controlling computers, the party would win the control to double spend bitcoins at will which is feasible. Double spending would have the effect of depreciating the value of bitcoins and their reliability. It is even a more significant threat that the majority of these mining pools and their respective computing powers are situated inside one nation which makes the idea of capturing them and gaining control over the bitcoin network much easier (Herrera, 2015). England’s central bank governor thinks of bitcoin as a sideshow with no threat to the system of the global economy. Regulators need to create compensation schemes and rules governing the cryptocurrency network to protect investors who have not done their homework.

There is a difference between the virtual currencies like bitcoin and electronic money. Bonneau et al. (2015) argue that electronic cash can be stored on a chip and is a legal tender. The growth of cryptocurrency is defined by its poor acceptance due to their high volatility and excessive fees. One can’t be sure whether the merchants they are in business with accept cryptocurrency which decreases the level of trust and causes customer dissatisfaction. There are technical limitations regarding the speed with the blockchain networks makes their use in the real world and solid companies impossible. The current cryptocurrencies have a rate of 10 to 100 transactions per second (Yermack, 2015). Conclusion According to Yermack, (2015), the ministry of finance thinks of bitcoin as a Ponzi scheme and warns investors against falling for it for the risk of an investment bubble.