While Bitcoin remains the dominant name in the cryptocurrency world, it also faces the problem of not being officially recognized in many parts of the world. Here are some of the problems that stand in the way of Bitcoin’s usability.
The giant of the cryptocurrency world had a tumultuous and pressure-filled month last month. Although Bitcoin is frequently on the agenda with the news of rise and fall, as we write this news, BTC continues to be traded at $ 41,454 and has a total market value of 480 billion dollars.
On the other hand, 2021 has been a full year of corporate purchases for Bitcoin. Many large institutional firms, even the world’s largest financial and hedge funds, have bought Bitcoin. Despite all these developments, there are some obstacles in front of Bitcoin.
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With newly appointed SEC Chairman Gary Gensler, the SEC’s view of cryptocurrencies hasn’t changed much, and the SEC remains wary of cryptocurrencies. Of course, problems between Bitcoin and regulators are not the first and will not be the last. However, this year, the SEC may impose much stricter rules after major institutions invest and/or start using Bitcoin.
Bitcoin’s Diffusion Problems
Bitcoin is undoubtedly the most important player in the world of crypto money and it is trying to continue stronger day by day. The number of people and institutions adopting Bitcoin is increasing day by day and even its prevalence in the retail sector is increasing, but this increase may not be enough.
Fidelity Digital Assets is one of the companies that has been working for two years to bring BTC to everyday use. It has partnered with companies like Starbucks to make it easier for retail users to spend BTC. However, this test is at a very early stage. This is probably because Bitcoin is seen as a “Store-of-Value” rather than a currency for everyday use.
Recently, Anthony Scaramucci, founder of global investment firm SkyBridge Capital, said that institutional adoption of Bitcoin is not enough, adding:
“Corporations are not on Bitcoin! Whoever says that Bitcoin is adapting at the institutional level may not be honest or they are seeing things that I cannot.”
Volatility
Bitcoin has been a coin that has hosted very sharp fluctuations since its first appearance. Although there are those who earn good investment income with Bitcoin, investors who are new to the game can be taken by surprise. When manipulations are added to all these, things get messy.
As a result, most retailers are at the mercy of the big. Although Bitcoin is always profitable in the long run, its rapid price volatility is deterring investors.
Scalability
The truth is that the Bitcoin network is not as “scalable” as other players in the market, and this comes across as an issue about Bitcoin’s long-term utility. For example, Bitcoin Lightning Network, a “layer 2 (Layer-2)” stability solution, has made significant progress recently. The BTC blockchain, on the other hand, does not support emerging decentralized finance (DeFi) smart contracts.
Tax Problems
Bitcoin is subject to capital gains tax under the definition of intangible property. Therefore, investors have to pay taxes every time they buy and sell Bitcoin at higher prices. Considering that Bitcoin is quite volatile, the availability of BTC is also limited.