Bitcoin Biggest Threats and Problems

Bitcoin climbed to new highs during the past 12 months. However, there are still many concerns, threats and problems which it has to overcome to excel further.

Recently, Tuur Demeester (Economist & investor, Editor in Chief at Adamant Research. Mostly Bitcoin), shared a tweet and pointed out his discussion with Mike Hearn about the biggest threats to Bitcoin. The recent attacks and rise of other coins are linked. Let’s discuss them in brief.

For those who do not know, Mike Hearn is a former Google engineer and a former contributor to Bitcoin Core. He left Google in 2014 to focus on Bitcoin development full time up to 2016.

The Biggest Threats to Bitcoin

Tuur Demeester, stated that in November 2012 he asked Mike Hearn “what he saw as the biggest threats to Bitcoin”. He mentioned around 10 important threats and problems:

1. Legal problems that are independent of specific companies or providers. I am hopeful this won’t be an issue, but it might come up in one or two jurisdictions (like the USA).
2. DoS attacks on the network.
3. Problems at MtGox. As they are the only serious exchange any difficulties there impact the whole community. Of course they have survived a hell of a lot.
4. Flaws in the construction of Bitcoin itself like software bugs, game-theoretic issues, possible dead stops after block rewards halving (guess we’ll find about that one in a day or two).
5. Inability to grow the market leading to stagnation and a loss of confidence, resulting in steady decline of the exchange value.
6. A decision that causes a major split in developer consensus, eg, inability to agree on how to migrate users from supernodes to SPV implementations, that then leads to confusing user experiences or broken software.
7. Miners starting to use a flawed independent implementation that is then used to split the chain and do lots of double spending.
8. Failure to overcome scalability bottlenecks.
9. Rise of a competitor (probably from the traditional banking space) that simple renders Bitcoin obsolete for all but the ideologically motivated. For instance this happened with desktop Linux.

Out of these, three threats are creating problems to Bitcoin. First, problems at MtGox. Second, a major split in developer consensus and the last but not the least is the rise of a competitor.

The recent attacks and hacks lead to a lot of chaos in the cryptocurrencies community. Moreover, the hard forks generating coins like BCH and BTG are great examples of a split in developer consensus.

In my view, the most important threat to Bitcoin is the rise of a competitor. Other blockchains such as Ethereum, NEO, Ripple, DASH and ICON poses a major threat to Bitcoin.

When it comes to speed, cost and scalability, Ripple XRP is best for Payments and better than Ethereum and Bitcoin. Therefore, rising altcoins should be one of the main concerns.

Another important problem – regulation and legal issues. There were many events lately such China banning bitcoin trading, legal issues in many countries and the recent talks of ban in South Korea. All these events led to a decline in prices, but they failed to make a huge impact. In time, prices recovered, but regulation challenge is still one of the mains concerns in the long term.

Having said that, I also believe that Bitcoin is here to stay. I see BTC as the heart of this cryptocurrency and digital currencies system.

Going forward, I think community will continue to grow with more real world adaption coupled of addressing problems such as cost and scalability.

Wishing best of luck to Bitcoin lovers, investors and traders.

Cheers!