The cryptocurrency market is a blossoming sector that has seen rapid growth and expansion in recent years. Though this rapid growth is exciting to watch, there are some important challenges facing the market that need to be addressed before we can see true widespread adoption of cryptocurrency. By understanding more about these challenges, we can begin to outline a logical plan of action for the cryptocurrency market to reach this level of adoption.
The rapid growth of the cryptocurrency market has left many investors in a state of shock. Prices have been on an absolute tear, and we have seen the total market cap of all cryptocurrencies grow by over $50 billion since the start of 2017. A similar trend has been seen with the usage of cryptocurrency across various areas. The popularity of Bitcoin Cash has skyrocketed over the past few months, as its value outperformed Bitcoin in terms of both market cap and daily transactions.
The Volatility of the Crypto Market:
One of the major factors that drive the growth of cryptocurrency is the volatility of this market. The daily value fluctuations of Bitcoin and other cryptocurrencies have made it extremely profitable to buy and sell at just the right time. This has created a sort of trading infrastructure in which people can quickly leapfrog up or down the wealth ladder by simply using their money to trade cryptocurrencies. While this can be exciting to watch, it is not entirely good for a cryptocurrency market that wants to see widespread adoption. When a currency is too volatile, consumers will be hesitant to use it instead of more stable currencies.
Despite the fact that the cryptocurrency market has been experiencing massive growth over the past few months, this sort of aggressive growth is meaningless if there are no plans for long-term sustained growth. When people think about the future of cryptocurrency, they should be thinking about how we can create a realistic roadmap to true widespread adoption. This does not mean that we should be discouraging people from investing in cryptocurrencies. With the recent rise in cryptocurrency values, it’s a great time to invest. Quantum AI Trading provides an intuitive interface and state-of-the art machine learning algorithms that will help you make smart trades.”
The Lack of Regulation:
One of the major problems facing a cryptocurrency market that wants to see widespread adoption is the lack of regulation across this sector. Currently, cryptocurrencies are primarily being used in darknet markets that deal primarily in illegal goods and services. Though there are some retail merchants who are starting to accept Bitcoin as a payment method, the vast majority of Bitcoin transactions are done on the black market. As cryptocurrency becomes more popular, we must begin to regulate this market accordingly.
One of the ways to regulate the cryptocurrency market is through the use of government-issued currencies. The United States government has been proposing legislation that would effectively make Bitcoin a legal form of currency. While this is a noble cause and worthy of consideration, it will take a long time before this sort of thing becomes a reality. This means that the cryptocurrency market must begin to fulfill the need for smaller transactions at a more reasonable cost. The average person does not have much money to spare to buy large amounts of cryptocurrency.
The Issue of Scalability:
The biggest problem facing the cryptocurrency market is that it is not scalable. If we want to see widespread adoption of cryptocurrencies, we must be able to achieve this goal without any technical issues. The use of slow and clunky systems has led many people to avoid using cryptocurrency for payments. People may be willing to pay with cryptocurrency if the system does not make them wait for hours on end in order to complete a transaction.
One of the solutions to this issue is the concept of a lightning network. This sort of system would allow for faster transactions, with a payment set to be completed in only a few minutes. At that point, the actual transaction information is stored on an off-chain system. This allows for swift and efficient cryptocurrency payments even during busy times. However, the need for such a system will have to be weighed against other factors before we can begin to see this sort of thing become a reality.
The main issue facing the cryptocurrency market is that it consumes an enormous amount of energy. Although this is not a huge problem in many cases, it can create an issue if the price of electricity goes up significantly. If a country like China begins to implement regulations that make Bitcoin mining illegal, there will be serious economic ramifications as people will lose their jobs due to this sort of legislation. One way to combat this issue is by using solar energy instead of traditional methods. As more people begin to adopt cryptocurrency, there will need to be more ways for us to buy energy.
The cryptocurrency market was poised for major growth even before 2017. However, this sort of growth has taken the market by surprise. Now that we have seen such a rapid increase in value, it is important to outline a logical plan of action for the future of cryptocurrency. This means that we need to begin exploring regulations, scalability, and energy consumption. By understanding these challenges, we can begin to outline an actionable plan that will help people use cryptocurrencies in everyday life.