Last Updated on February 28, 2021 by Filip Poutintsev
As with any technology, Bitcoin also has its pros and cons. We are read about pros every day, and that’s the way it should be, as Bitcoin is superior to any other monetary system that has ever existed. But in order to be truthful, cons also need to be discussed sometimes. This article will present the biggest cons that Bitcoin has and a solution to how they could be solved if they are solvable.
There are also many fake problems that some people claim that Bitcoin has, but in reality, they do not exist. This article will also address them.
Too complicated for non-tech people
The biggest problem with the mass adoption of Bitcoin is that it’s a bit too hard to use for most people. People are lazy and have happily given away all their financial freedom to the banks. They rely on that the bank will take care of their money and not lose or steal all of it. With Bitcoin, it’s way too complicated for them. You suddenly have to rely only on yourself and take full control of your assets, including the security aspect. Even installing a desktop wallet and backing up private keys is way too hard for many people. There are seriously some people who still don’t know how to use a smartphone or online banking. For them using Bitcoin is impossible. Add to this lot of misinformation and horror stories about how someone lost all their fortune because they forgot their password or sent Bitcoin to the wrong wallet, and we have a large group of people who don’t know how to use Bitcoin and are afraid to try. For Bitcoin to reach mass adoption, we need companies to offer easy Bitcoin wallets for consumers so that they would not have to deal with Bitcoin address nor private keys, and could pay simply with QR-codes. And if they forget their passwords, they could simply take their ID, go to the office and restore their account. We are seeing a lot of interest from traditional financial institutions towards Bitcoin, and perhaps the next online wallet will not fail at it as PayPal did.
But there is another way how this problem will be solved naturally. It’s the same way how all inventions became mainstream, while at the beginning, people were not eager to adopt them. This way is quite simple, but also slow and sad. Some people will never understand nor use Bitcoin; eventually, they will grow old and die. At the same time, young people are very tech-savvy and for them using Bitcoin is very easy. Eventually, a few decades from now, these tech-savvy youngsters will outnumber and replace the old farts, and by that point, Bitcoin will finally reach mass adoption.
No back-up protection if private keys are lost or stolen
In my opinion, this is the biggest problem with Bitcoin. There’s basically no 100% safe storage method for private keys or back-up. No matter what you do, something unexpected can happen, and you may lose everything you have. If you store small amounts, you may not worry about it, but if you store Bitcoin worth millions of US dollars, you will be worried. And many of us may be holding such large amounts in a few years from now.
No charge-back option
This is both a pro and a con. Charge-back is a great way to fight online scam, but at the same time, it created a new form on scam – friendly fraud. The way you can dispute credit card payments is totally unsustainable, but the total lack of it is also a huge risk. This is the main reason why Bitcoin is not used for P2P online payments as much as it could be because the risk of being scammed is huge. So even most sworn Bitcoin supporter end up sending money with PayPal.
The best solution for this would be internal Bitcoin payment within one wallet provider, which would have buyer protection. Withdrawing to external wallets would require some verification that the customers do not have any complaints to the merchant. Any major Bitcoin wallet and payment provider could introduce this feature and help make Bitcoin purchases safer.
Not enough big merchants
The lack of big merchants that would accept Bitcoin payments is actually a mystery. Bitcoin is much better than any other payment method online. And the lack of a charge-back option makes it also less risky. But still, only after several years of Bitcoin hitting the mainstream, only a few of the big businesses have started to accepting Bitcoin payments. The reason for this is not clear, but it’s probably related to over obedience of laws and regulations. Large companies are the biggest cowards when it comes to money laundering and other financial crimes, and as governments are generally reserved when it comes to Bitcoin and other cryptocurrencies, it’s enough reason for them to completely avoid such payment methods.
Problems that don’t exist
Firstly, one could argue if Bitcoin is even volatile in the traditional meaning. Sure, in the short term, Bitcoin is highly volatile, but in the long term, it’s not. In the long term, Bitcoin is the opposite of volatile. It had very stable growth during its whole existence and is one of the most profitable investments in history.
Secondly, as a completely unregulated asset that is traded 24/7 (unlike any other asset), it’s understandable that the price variations will be significant. Especially when the market capitalization of Bitcoin not been particularly high. Even today, Bitcoin has still smaller market capitalization than the largest online companies such as Amazon, Apple or Google, which are also quite volatile on the stock market compared to other more traditional companies.
The reason for the short-term high volatility of Bitcoin are daily traders who exchange cryptocurrencies back and forwards without any valid reasons. Most of these daily-trades are performed by large crypto exchanges who do it for absolutely free and have tremendous volumes. This action is also known as market-making, which is a dishonest method of boosting the trading volume of the exchange and thus making it look like the exchange has a huge client base.
In the future, when the market capitalization of Bitcoin will increase the short term volatility definitely drop, and Bitcoin may even eventually become as steady as other strategic assets today.
Slow transaction time
The person who called Bitcoin slow must have never used banks.
On average, it takes 10-20 minutes to verify a Bitcoin transaction. In case of too low fees and network overload, this time may stretch to one hour.
In the financial world, where money transactions take from few hours to several days, this is not slow. This is actually fast enough.
The people who claim that Bitcoin transactions are slow usually do the comparison wrong. They compare the speed of the whole Bitcoin network to the speed of a specific payment provider. Sure, if you send money with PayPal, it will arrive instantly, but so will Bitcoins if you send them from BitPay wallet to another BitPay wallet. Sending FIAT within a specific payment provider is always fast, but if you want to receive money to your own bank account, it will take days. This, for example, applies to credit card payments, which appear fast, but in reality, it takes even a week until the money actually reaches the merchant.
Unlike banks, which never had any intentions of speeding up transaction times, Bitcoin developers actually have speeded up transaction times even further. With Lightning Network, it’s possible to transfer Bitcoin in just a matter of seconds, and this system is gaining more and more popularity.
Again, the person who claimed that Bitcoin transactions are expensive has obviously never used services provided by financial institutions. The average fee for a Bitcoin transaction is a few dollars. Even record-high fees of 10 dollars in the past are not that expensive compared to the credit card or bank transfer fees. Bank transfers in the USA will cost on average 25$ + 15$ (fees for sending and receiving). For international transfers, it’s 45$ + 15$. When you buy goods with a credit card, the merchant pays on average 1,3%-3,4% for a 1000$ purchase that would be 13$-34$.
The only instance where Bitcoin transaction fees may appear high are micro-transactions. But one could seriously ask, does it make sense to make payments of a couple of dollars with Bitcoin?
Luckily, like the slow transaction time, this problem related to Bitcoin scalability will also be completely solved by Lightning Network. And it will lower Bitcoin transaction fees to just a few cents.