Regarding the increasing number of hackers on the internet, increasing vulnerability of passwords and personal information, bitcoin is a currency that runs through cryptographic techniques.
Bitcoin is not being circulated in reality but being traded online makes it vulnerable to hacking. Hackers are always seeking out vulnerabilities they can use to steal your money before you know what’s happening. There have been cases where exchanges fail, and millions in bitcoins disappear.
One such case is the infamous bitcoin exchange Mt. Gox which was hacked several times between 2011 and 2014, leading to 850,000 bitcoins valued at $450 million disappearings, making it the biggest heist in the history of cryptocurrency. The hackers used phishing attacks, malware, social engineering, and keyloggers.
Another case is of 7,000 bitcoins valued at $40 million stolen from Bitfinex back in 2016, and the hacker remains unidentified. The attacks on these bitcoin exchanges prove that no one can resist a potential hack attack. This makes it more likely for people to invest in other cryptocurrencies that are safer, like ripple (XRP) that has never been hacked before. Check more at www.profit-secret.com/.
Not only bitcoin but other forms of cryptocurrency are also unsafe because they are entirely unregulated at the time being. This means no one can track transactions if someone illegally tries to convert their cryptocurrency into fiat currency. In addition, the absence of regulations makes it susceptible to use by criminals who can exploit crypto-currency for money laundering or terrorist financing.
The following factors can explain the rise and fall of bitcoin:
- Lack of regulations and anonymity
- The environmental damage caused because of mining bitcoins
The anonymity that cryptocurrencies provide can also be a potential reason for their downfall. It opens the doors to illegal activities such as buying drugs and gambling online, eventually leading to authorities cracking down the crypto-currencies and ultimately its downfall. Recently, bitcoin has been nicknamed “the currency of the dark web” because of its anonymity and potential use in illegal activities.
It has been found that bitcoin mining requires a lot of energy that is not eco-friendly. Bitcoin mining involves using high computing power to solve complex algorithms. Once an algorithm is solved, it earns a miner 12.5 bitcoins, which repeats itself. The number of bitcoins available is 21 million, and at the current rate, it will take over 100 years to be mined thoroughly, after which no mining will be required.
It has been estimated that by 2020 bitcoin mining would consume 14,000-megawatt-hours of electricity, equal to the amount of electricity New Zealand uses in a year. In addition, it will require approximately 4,000 tonnes of carbon dioxide to be released into the atmosphere for mining bitcoins, certainly not eco-friendly.
The rise of bitcoin was brought about by people who believed in the ideology of the blockchain technology that powers cryptocurrency transactions.
The downfall started with bitcoin being used for illegal activities and lack of regulations on cryptocurrency exchanges leading to money laundering, terrorist financing, and use by criminals. In addition, the failure of bitcoin to resist thefts and the dislike for its energy consumption has also played a significant role in its downfall.
Like any other currency, Bitcoin has risen and fallen throughout time, but there is still hope as this cryptocurrency may rise again. With thousands of people who support it and believe in its value, it can be said that it is here to stay. In addition, many countries such as Japan, South Korea, and the UAE have officially made cryptocurrency legal, which has helped recover by a small percentage.
A recent survey revealed that people did not trust bitcoin as an investment option because of security. This is another proof that bitcoin falls short of being a reliable currency. Furthermore, it has been found that people would not invest in cryptocurrency unless it is regulated.
This has led to various countries making plans to regulate cryptocurrency and implement strict rules against money laundering and terrorist financing, which will help crypto-currencies become a reliable medium of exchange.
It will take time for governments to legalize and regulate cryptocurrency, but countries have started taking measures to control the currency as its value goes up.