When Satoshi Nakamoto unveiled bitcoin in 2009, it was nothing short of a revolution. On one side, the world of finance stumbled because that could exist valid form of currency without any dependence on governments or banks. This was all set to change the landscape of finance which has been established and reigning supreme for centuries together.
What made bitcoin and the blockchain technology so dependable and investment-worthy was the fact that they presented a lot of advantages that are considered extremely relevant if we were to look at the challenges being faced today.
The transactions enabled by the blockchain technology through cryptocurrency were fast, reliable, cheap, and global. These are the four major advantages that any financial institution looks at.
However, was it a bed of roses for the entire crypto space? Definitely not!! There are a few instances that destroyed the reputation of cryptocurrency and blockchain technology. Let us look at a few of them and its implications.
The Mt. Gox Hack
The hack of the Mt. Gox exchange is considered to be the most infamous temperature in the history of crypto. About 450 million worth of bitcoin was hacked in 2014 which completely collapsed the exchange that operated from Japan. It has been seven years since it happened and until now, none of the customers have been compensated.
As much as blockchain brings anonymity, the same anonymity also turns out to be a disadvantage because everything is untraceable. It is to be remembered that Mt. Gox is not the biggest hack until now. It will not be an exaggeration to say that about $1.5 billion have been lost because of cryptocurrency exchange hacks.
The Crypto Whales
As you may have known, in the crypto world, a whale is the individual or the entity that holds a large amount of a particular crypto coin which indirectly determines the health of the demand and supply equation.
If a whale decides to dump all the currency that they have, it might radically alter the price of any crypto coin. As recently as July 2021, 18 new whales have been observed concerning bitcoin alone. They hold about 82,760 bitcoins which amounts to more than $3 billion in current prices.
The nuisance caused by whales is so annoying that a dedicated Twitter handle has been set up to alert investors about whales.
The Non-Crypto Whales
It might be such an odd combination! However, some people might not hold cryptocurrency or might not be completely affiliated with the crypto world. However, because of the cultural impact that they bring about in every conversation, even they have the power to radically alter the price of any crypto coin.
Let us all admit it! You were already thinking about the person we are going to talk about – Elon Musk. We all remember how a single tweet skyrocketed the price of Dogecoin which had no conceptual strength whatsoever. It can also be recollected that the moment he announced that Tesla would be accepting bitcoins as a valid mode of payment, the prices skyrocketed. However, within a short time, he reversed his decision, making the price of bitcoins plummet to levels not seen before in recent times!
The Blockchain Limitations
It has been observed as late as September 18 this year that some of the most promising blockchains can break down and this uncertainty might not be considered welcome, especially if the blockchain technology needs to find mainstream adoption. The best example of such a blockchain is Solimo.
Solimo started with a measly market cap of about $0.1 billion in September 2020. Just a year later, on the 9th of September, the market cap skyrocketed to $62 billion.
Solimo was touted to be the next bitcoin and it seemed to have addressed all the limitations of bitcoin. It was considered to be the world’s fastest blockchain and they boldly claimed on their own website that the transactions will never be stopped. However, for about 17 hours, the buying and selling of its native token was disrupted and the reason stated was “resource exhaustion.”
If some of the most promising blockchains that have grown so humongously in the market cap can suffer this, think about the blockchains that are springing up left, right, and center, limiting possibilities in all places!
Do all these things mean that everything is over for crypto and blockchain? Barrel to all of these, it cannot be denied that crypto and the adoption of blockchain technology that enables some amazing utilities is growing without any attenuation.
Let us take NFT for example. NFTs have been steadily growing in the past few months, and it does not show any signs of stopping. The blockchains that power NFTs have also stood the test of time, and they can definitely be dependent on. There might be a few elements of criticism with respect to the centralization brought about by the marketplaces but all that said, developing an NFT marketplace right now is a great business idea.
If you intend to invest in the crypto space, all that you need to do is to find bankable and profitable ideas like NFT marketplace development. You can also go for developing your own cryptocurrency exchange. We could probably go on but it is always better to exercise your diligence meticulously before you start your journey!
Randal has been following the crypto space since 2013. He is a passionate advocate for blockchain technology, and believes that it will have a profound impact on how people live their lives. In addition to being an avid blogger, Randal also enjoys writing about developments in the industry as well as providing useful guides to help those who are new to this exciting frontier of finance and technology.