The rapid growth of the cryptocurrency industry has led to an increased scrutiny from the general public about the technology. Many are convinced that cryptocurrencies and blockchain is the technology of the future and will disrupt many industries and systems. There are also those that oppose the legitimacy of cryptocurrencies and questions the effectiveness of blockchain’s technology.
Of course, there will always be those that have a different perspective on things, and cryptocurrencies aren’t any different. However, it is important to look at the different perspectives on the opposite end to evaluate whether it has any merits or just plain ‘noise’.
Creator of Bitcoin is Anonymous-Not credible
No one knows who the creator of Bitcoin – Satoshi Nakamoto – is. The anonymity of Bitcoin’s creator has often been a point for many to discard any of Bitcoin’s merits. However, the anonymity of Bitcoin is perhaps the main reason why it is so revolutionary and successfully functional. You see, Bitcoin is a trustless system where you do not have to trust anyone in the network to ensure that our payment will be facilitated and secured. There are mechanisms in place (consensus mechanisms) that ensure the alignment of interest of every participant, therefore enabling the self-operating and self-executing to function securely.
In short, the technology speaks for itself. The identity of the creator has no relevance towards the quality and credence of the technology itself. Why? Because Bitcoin’s underlying source code (the lines of computing codes that make Bitcoin work) is open source, meaning the codes are publicly viewable and freely available. Anyone can inspect and download Bitcoin’s software for free! This open-source nature allows anyone to uncover the underlying mechanics of Bitcoin and its potential limitations. The identity of Satoshi is then irrelevant since the technology itself is open to the world, allowing the public to dissect Bitcoin down to every single detail. This transparency has allowed Bitcoin to stand on its own feet, separate from the identity of its creator. After almost a decade of existence, it is clear that Bitcoin is a disruptive technology with little fundamental issues.
Bitcoin does not have any intrinsic value
Value is a subjective thing and is ultimately determined by people; if many people deem it valuable then there will be greater demand for it. Perhaps the best way to illustrate the notion of intrinsic value is through gold. Any debate about intrinsic value will be incomplete without mentioning gold. Ironically, if we take a look at gold, only 10% of the total gold supply is used for actual industrial and electronic purposes, while the majority is used for making jewels. In short, the ‘intrinsic value’ that many have associated gold with is rooted more on ostentation and the ‘perception’ that gold is valuable rather than being backed by actual use cases. The notion that ‘intrinsic value’ can only be attributed to something physical is irrelevant and should be discarded. Bitcoin – although intangible – has actual uses cases. Using Bitcoin, users can circumvent the traditional banking system full of expensive intermediaries and long waiting times. With a fixed supply of only 21 million, it is also inflation-protected.
Bitcoin is used for illicit activities
This assumption is perhaps one of the most prevalent but destructive views that prevents many people from exploring Bitcoin and cryptocurrencies further. The usage of an item by a person – no matter how good or bad they are – shouldn’t be a yardstick used to evaluate the item itself. An analogy is when someone uses a knife with a bad intent, does the fault lies with the knife or the person? Obviously, the knife is an integral part of our households, but it can also be a weapon of destruction. Similarly, the revolutionary features of Bitcoin and cryptocurrencies shouldn’t be overlooked just because some bad people are using it. Moreover, for years, we have seen more evil happening with conventional fiat currencies than Crypto. It is far more convenient for illegal activities to occur in Fiat because fiat transactions cant be recorded and displayed publically. While Cryptocurrency transactions are available for the public eye.
Volatility is crazy, must be a scam
There is often a misconception that the extreme volatility of cryptocurrencies equates to the entire industry being labeled as a ‘scam’.
Volatility refers to the sharp and sudden changes in prices of an asset. The higher the volatility of an asset is, the riskier it is to invest in.
It’s true that cryptocurrencies are the most volatile investment that you can find. In 2017, the entire cryptocurrency market (indicated by market capitalization) grew by over 4,000% in a span of just a year and thereafter crashed by more than 75% eight months later!
However, it is inaccurate to correlate the volatility of any asset or investment to its credibility. The price volatility of an asset doesn’t have anything to do with the merits of the technology, especially when the asset is backed by an infant tech like cryptocurrencies. The market is somewhat similar to the dot-com boom back in the 1990s, where the prices of internet stocks grew like crazy. The periods of exponential boom and bust was attributed to the infant technology of the internet; new technologies will always be volatile and high-risk at the start. it is clear that the internet is a revolutionary technology that is omnipresent in our daily lives now.
Cryptocurrency transactions are slow
As can be seen, Bitcoin is capable of processing only 7 TPS, Ethereum at 20tps whereas VISA is able to handle tens of thousands of transactions per second. Therefore, Bitcoin isn’t a viable alternative to current payment processors. However, there are numerous innovative solutions that try to significantly enhance the scalability of blockchains. These solutions are currently in the works right now to expand the capabilities of blockchain technology.
Moreover, the Scalability is perfect right now in co-relation to the demand as Visa and Paypal transactions are way more in demand at the current moment as crypto adoption is not at par with the Visa card users. Scalability is definitely important but not urgent as we are at the early stages. Vitalik Buterin says that Ethereum can achieve true scalability in 3-5 years while being completely decentralized. Which should be the ideal scenario.