Blockchain technology, including cryptocurrencies, are a fascinating topic that has been growing in popularity over recent years. Few people hear the term blockchain without immediately thinking of Bitcoin, however, IBM Blockchain and Spotify are just a few big players worth mentioning.

Enthusiasts within the cryptocurrency community hold tightly the idea that bitcoin will take over as the world’s currency and replace fiat currency like the US Dollar. Many economists and speculators believe otherwise, here are six reasons Bitcoin will not replace USD.

1 – Slow Transaction Speed

As of October 2020, the average confirmation time of a transaction on the Bitcoin network was over 12 minutes! If you are annoyed by people who pay with a check at the register, wait until you are behind someone paying in BTC.

Compared to the 1700 transactions per second that Visa boasts, 4.6.-7 transactions per second on the Bitcoin network is crazy slow. How can this be sped up?

  • Increasing the block size which would allow more transactions per block. Yet, this means that each node has a larger piece of data to agree on and will cut on the other side of the sword as well.
  • Decrease TB or mining complexity. That could work!
  • Oh, wait…both of these are limited by the TR or the time it takes for the network to reach a consensus on a block. Because a new block cannot be added until the previous is validated, you might be waiting, once again.

2 – Bitcoin Whales

The top 106 wallets hold approximately 15% of all known BTC. Therefor, two issues arise. 

First, with these coins just sit in a wallet there is a huge portion of liquidity in the network missing; driving up volatility. Secondly, having such large influence over the BTC network allows for these whales to artificially pressure the market. This pressure can lead to decrease and increase of the price. Thanks 2018.

3 – Learning Curve

Cryptocurrency, including Bitcoin, comes with a huge set of terms that an avid user of BTC must know in order to navigate the ecosystem efficiently.

AddressThis is like a physical address for a single transaction
Bit1 / 1,000,000th (millionth) of a Bitcoin, good for tips
BlockPiece of data on the blockchain containing transaction data
Confirmationoccurs when some number of nodes of the network agree that a valid transaction took place
Private KeyA secret piece of information, like an API Key or Bank Pin that allows BTC users to spend coins
SignatureSome magic on the network to uniquely identify ownership of BTC by combining the wallet and private key
Hot WalletDigital Wallet that is connected to the Internet
Cold WalletA wallet that is not connected to the Internet, such as a flash drive or physical medium
NodeAn active server participating in the Bitcoin network

4 – Price Volatility

Coindesk data 12/2/2020

Between December 2nd, 2019 and December 2nd, 2020 the inflation rate of the US Dollar was 1.9%. That means that something which cost $1 in 2019 cost $1.02 in 2020. Meanwhile, the price of BTC fluctuated between $7200-$19,200…that’s 266% in a single year. With a 30-day volatility index of 3.82%.

Let that sink in for a minute.

5 – Quantum Computing

A huge leap in algorithmic computation power is a game-changer for almost everything. Bitcoin is no different. Quantum computing at scale is simultaneously the BEST and WORST thing for cryptocurrencies that rely on a strong hashing algorithm and encryption. *psst* Bitcoin

The current theoretical prowess of quantum computers leads researchers to believe that bitcoin mining and encryption could be virtually nullified in a matter of minutes. Making all of the previous work on the blockchain pretty useless.

Then again, there is a silver lining. With such immense power, quantum computers will likely be used to generate the next wave of ultra-complex encryption. That’s good news to the new Bitcoin variations built on a quantum network…sadly, not for the existing BTC.

6 – Accountability and Insurance

Unlike fiat funds stored with a an FDIC insured bank, there is not insurance for your hard-earned BTC. If you fall victim to wallet theft, too bad!

Currently, there are not robust law enforcement tools available to regular people that have disputes involving Bitcoin. The only resources that local and Federal have for tracking BTC are generally allocated to deal with laundering and transactions related to large-scale illegal activity.

For the reasons listed above, Bitcoin will not overthrow USD any time soon. However, there is hope for Bitcoin as a minimally regulated (at least weakly enforceable) commodity for enthusiasts, speculators, and a few average-Joes to make some extra USD on the side 😀