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Why can’t cryptocurrency become a default payment method?

Why can't cryptocurrencies become everyone's default payment method?

There are certain hidden costs involved while paying through cryptocurrency

Cryptocurrencies have grown exponentially in popularity over the past few years. But its journey in terms of growth has been a roller coaster ride. At times, cryptocurrencies, like Bitcoin and Ethereum, have shown an incredible hunger for success, but there have been times when their momentum has been lacking. The extreme volatility and sudden price swings occurring at regular intervals are taking the appetite away from the emerging sector. These are just some of the reasons cryptocurrencies are less adapted to be the default payment method. However, the underlying blockchain technology holds promise.

Although companies have begun accepting payments in several cryptocurrencies in some countries, the recent market crash has prompted them to reevaluate their decision. Take another example: El Salvador. The Central American country legalized Bitcoin last September and started building a crypto campaign. The country’s President Nayib Bukele has promised that Bitcoin will help rebuild the economy. But his government has lost about $40 million in the market crash since he bought Bitcoin. Financial experts are worried about Salvadoran Bitcoin gambling.

There are other major (real) reasons why Bitcoin or other cryptocurrencies may not become a default payment option, at least in the near future, without a technological upgrade. Bitcoin transactions take about 10-15 minutes to process. The technology is built in such a way that when a cryptocurrency user makes a transaction, it must be validated by miners. This process delays the real time we receive when transacting through the current banking system. Another factor is that the fees that miners charge for their services must be paid by the users. While this may not be significant, it is still more than what we pay our banks currently.

In addition, strong volatility makes it less secure and reliable. If you have Rs 10 lakh worth of Bitcoins you can buy things with that money today. But there is no guarantee that the value of Bitcoin will remain stable; it can swing both ways with a big profit.

Despite these shortcomings, the underlying blockchain technology is inspiring and there is a real possibility that this can be improved upon in the future to address the challenges.

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