![]() Cards with Bitcoin wallet information stored in them have been proposed, but there is no consensus on a particular system. It would always have to be converted to other currencies. Since Bitcoins do not have a physical form, it cannot be used in physical stores. This might cause spending surges which will cause the Bitcoin economy to fluctuate very rapidly, and unpredictably. Since each bitcoin will be valued higher with each passing day, the question of when to spend becomes important. This system is designed to reward early adopters. Each bitcoin will be worth more and more as the total number of Bitcoins maxes out. Since the total number of bitcoins is capped at 21 million, it will cause deflation. As this is a fairly new system, if Bitcoins were adopted widely, and a flaw was found, it could give tremendous wealth to the exploiter at the expense of destroying the Bitcoin economy. The Bitcoin system could contain unexploited flaws. This problem can be solved using a third party escrow service like ClearCoin, but then, escrow services would assume the role of banks, which would cause Bitcoins to be similar to a more traditional currency. When goods are bought using Bitcoins, and the seller doesn’t send the promised goods, nothing can be done to reverse the transaction. For example, if a t shirt was initially bought for 1.5 BTC, and returned a week later, should 1.5 BTC be returned, even though the valuation has gone up, or should the new amount (calculated according to current valuation) be sent? Which currency should BTC tied to when comparing valuation? These are still important questions that the Bitcoin community still has no consensus over. It will also cause a lot of confusion if a refund for a product is being made. This constant fluctuation will cause Bitcoin accepting sites to continually change prices. It was valued to be less than $1 just 6 months ago. As of June 2nd 2011, one Bitcoins was valued at $9.9 on a popular bitcoin exchange site. The value of Bitcoins is constantly fluctuating according to demand. The coins the investor owned will also be permanently orphaned. This can bankrupt a wealthy Bitcoin investor within seconds with no way form of recovery. These coins will be forever orphaned in the system. There is nothing that can done to recover it. If a hard drive crashes, or a virus corrupts data, and the wallet file is corrupted, Bitcoins have essentially been “lost”. There is also a possibility that governments might force merchants to not use Bitcoins to ensure that users’ transactions can be tracked. This makes it unfeasible to completely rely on Bitcoins as a currency. Like any currency, there are disadvantages associated with using Bitcoin:īitcoins are still only accepted by a very small group of online merchants. ![]()
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