The Bitcoin has quickly become popular since it was first mined in 2009 by Satoshi Nakamoto. Generally speaking, this new crypto currency seems to be the ultimate solution to many money problems. For instance, it is free from the control of corrupt governments and banking institutions that seem to leverage the money system against the people.
However, every Bitcoin user is faced with a series of problems that may leave a naïve investor in serious money problems. Here are some 5 major problems and their solutions.
1. Loss of Bitcoins Stored in Online Wallets.
Storing bitcoins in a cloud exposes it to unscrupulous thieves. While high end cryptography is set in place to ensure security, determined thieves have managed to create ransom-ware that could quickly siphon all your bitcoins untraceably. These ‘hot’ wallets can also be subject to spyware that may disguise as applications or plugins, especially on smart phones. These hackers have caused investors painful loses, such as the theft of 850,000 bitcoins from Mt. Gox in 2014.
Having an online wallet also means placing the security of your bitcoins in the hands of a third party. Upon loss of encryption keys, all bitcoins in your online wallet are also lost, and are often unrecoverable.
The most effective solution to this particular problem is backing up your bit coin wallet balance records in a hard drive or other external storage that must be kept intact. This is for those who use ‘cold’ wallets (which are safer than the ‘hot’ wallets). This back up ensures that the bitcoin data is not lost in case of damage to the computer.
Those who prefer the online wallets should be careful to encrypt them and should also use multiple signatures. In addition, they should be wary of shady online services and programs that could be used by hackers.
One reason that Bitcoin may never make it as the world currency is its instability. For instance, on December 2011, the value of one bitcoin was a little over 4 USD. A year later it rose to 13 USD, then skyrocketed to 898 USD the following December. In December 2014, its value fell to 302 USD. Currently, the value of a single bitcoin is 14,269 USD.
This instability makes it almost impossible to make any future plans that involve bitcoins.
The solution to this particular problem is in understanding that Bitcoin is unpredictable. Future plans especially those that involve fixed amounts of money should not be based on bitcoins. Not yet, anyway.
3. Lack of Acceptability
Bitcoins are majorly used in payment of goods and services that are purchased online. Only few businesses actually accept them as a method of payment. They have yet to gain widespread acceptance in the world.
Some countries especially in the Middle East have even taken regulatory actions against them. Additionally, major stakeholders such as Google and Apple have not yet added Bitcoin as a method of payment in their respective stores.
Since the decision to promote Bitcoin lies in the hands of business owners, the viable solution to this is to use bitcoins where they are accepted and convert them to hard currency for use where they not.
4. Inability to Recover Lost Bitcoins
This is a major headache to a lot of Bitcoin users, especially those who have forgotten their passwords, or lost their wallets altogether. The tight cryptography that is the base of Bitcoin security makes it literally impossible to recover any lost keys.
In light of this, it is best to prevent the problem from happening in the first place, than looking for solutions afterwards. Backup records should be kept very safely, away from loss, damage or unwanted hands. Furthermore, users could take advantage of the available Bitcoin service providers such as Coinbase which even has a password recovery scheme.
5. Irreversibility of Transactions
Nobody has control over Bitcoin transactions. They are meant to be irreversible, to assure the recipient of permanent ownership of bitcoins. This only becomes a problem when they are deposited in the wrong account. Their return is entirely dependent on the recipient’s sense of integrity (which is not always there, especially when the value of bitcoins is as high as it is currently).
In this case, try contacting the recipient and ask them to return the bitcoins.However, prevention is better than cure.Carefully double check the transaction details and make sure that they are all correct before sending.
In conclusion, Bitcoin is still fairly new and most of these problems are still being analyzed to find permanent solutions. Meanwhile, it is important for everyone who uses this digital currency to be extremely careful when it comes to the security of their accounts and wallets.