Crypto Analyst Cautions Investors Against Bitcoin for 3 Key Reasons
April 17, 2020 @ 14:47 +03:00
Bitcoin is often described as gold 2.0; a superior system of storing and transferring value. It has seen a rapid increase in market capitalization since its introduction in 2009, with strong custodial, exchange, and futures infrastructure. Yet, one cryptocurrency analyst known as cryptocomicon recently laid out a series of compelling reasons why one should not invest in Bitcon. The three that stood out most were limited privacy, centralized mining, and the lack of scalability.
Up until 2018, governments and various financial bodies criticized the “anonymous” nature of Bitcoin, stating that it poses a risk to the global financial system. But, as reported by Cointelegraph, South Korea recently cracked down on a large-scale sex crime ring earlier this month through tracking Bitcoin addresses.
One could argue that the lack of privacy measures on the Bitcoin network has actually improved the image of the dominant cryptocurrency. Previously the public and governments perceived Bitcoin as the currency most preferred for use in criminal activities and terrorist financing, but this view appears to have changed in recent years as sophisticated blockchain analytics companies who offer crypto transaction tracking services emerged.
Thus, the lack of privacy can also be viewed as increased transparency and this could eventually prevent governments from over-regulating Bitcoin-related companies.
The low scalability of Bitcoin is similar to the “no privacy” argument in the sense that it can be comprehended in two ways: it can make transactions expensive when the network reaches its peak, but it can also encourage second-layer scaling.
Centralized mining is a problem now, but is expected to improve over time According to a report from CoinShares Research, up to 65 percent of the Bitcoin network hashpower comes from China, a level unseen since 2017. While the level of mining centralization in China is currently high, over time it is expected to become more distributed across the world. To date, large mining centers in China have been able to access cheap electricity in mountainous regions of the country, operating ASIC miners at low costs with natural cooling. Consequently, the level of mining centralization in China reached unprecedented levels in December 2019.
Crypto Analyst Cautions Investors Against Bitcoin for 3 Key Reasons, CoinTelegraph, Apr 17