Blockchain and Bitcoin offer a solution to enable trust-free transactions. Websites like BitQT offer trading features like artificial intelligence, trading bots, market analysis, live customer and much more for bitcoin traders. However, they will face challenges as these technological advances continue to grow in the digital economy. For example, Bitcoin’s use of a two-layer structure of public and private blockchains means that private blockchains must provide added security measures such as Two Factor Authentication (2FA) for withdrawals.
There is also a dispute in cryptocurrency communities about whether government regulation is necessary or if it will curtail innovation. Private Blockchains are a new advancement that streamlines the processing of private transactions.
While the blockchain is an immutable ledger, it isn’t easy to simultaneously store millions of records on one chain. Private blockchain allows organizations or companies to control their chains and only lets certain people or organizations see the information on it.
The issue with security lies in the fact that anyone who has access to the private key can potentially steal all of the information on that chain. The below-listed portion will explore the challenges bitcoin and blockchain technology are facing right now with an ambitious focus on what can be done to work through them.
Legal Challenges bitcoin and blockchain are facing:
- Bitcoin is classified as a commodity rather than a currency by US regulatory bodies such as the Financial Crimes Enforcement Network (FinCEN) and is, therefore, subject to capital gains taxes.
- Governments are also at odds with one another regarding supervision and security measures that need to be implemented for cryptocurrencies, such as bitcoin. For example, the UK government has already announced their plan to apply VAT to bitcoin purchases, which are tax-free since it operates outside the banking system. If people cannot reach a consensus among governments, this could lead to slow adoption by businesses.
- Given the nature of the blockchain, there is a risk that private information would be made public if one were to gain access to the chain. It is why businesses are turning towards private blockchains. There are still ways, however, that a person can gain access to another’s personal information or private key, especially if they gained physical access to their computer.
Adoption challenges faced by bitcoin and blockchain:
- The irreversibility of blockchain transactions means that bitcoin and blockchain transactions can be difficult to reverse if a mistake is made or users send payment to the wrong person.
Financial Challenges:
- The cryptocurrency market’s volatility has risen, fallen, and risen again in recent years. This volatility makes it difficult for bitcoin and blockchain startups to secure funding since they cannot provide financial reports citing stability. It is especially problematic when trying to secure venture capital funding.
- Other potential funding sources include ICOs (Initial Coin Offerings), which allow investors to purchase a token representing equity in the company. Some companies have succeeded in this option, but others have experienced losses due to fraudsters posing as honest ICOs.
Companies that have overcome the challenges:
It should not be surprising that some companies have overcome their challenges while using Bitcoin and Blockchain technology. Some examples of these are Overstock.com, Dish Networks, and Expedia. Overstock uses blockchain technology to allow its customers to track the origin of its products as well as manage customer loyalty programs. They have reported saving millions in dollars annually in cost savings by switching to blockchain payments.
Dish Networks has implemented a solution with IBM called Adept to improve customer service and reduce time spent resolving disputes. The blockchain solution lets customers track their packages throughout their travels and makes it simple for Dish Network employees to resolve issues with customers throughout the day.
Expedia has also received attention for implementing blockchain into their backend for payments to hoteliers worldwide. It allows hotels to receive payment in Bitcoin, which increases sales and ultimately improves hotel costs. The implementation of the blockchain has since expanded globally. It has allowed Expedia to deal directly with hoteliers rather than using a third-party booking system that charges fees on top of their room rates.
How can businesses work through these challenges?
Businesses can take many forms of 2FA and extra security measures to ensure they are safe while using Bitcoin and private blockchains in e-commerce solutions. Each business handles its blockchain differently. The first step is to find a suitable platform for their business. Some of the most popular blockchains in the world include Ripple, Ethereum, and Hyper ledger Fabric.
The second step is to figure out what level of security they need. Each platform has different features regarding blockchain security, such as storage, interactions with other ledgers, etc. Selecting which system parts to use is essential for a company’s e-commerce success. Unfortunately, there will be no way for businesses to know whether or not there are any vulnerabilities in their private- or public blockchains until after they have been implemented and tested.
While Bitcoin and private blockchains hold tremendous promise to modernize business, there are many challenges that businesses will have to face. One of the most significant issues is whether or not government regulation can curb the rampant innovation driving digital growth across industries. As a result, innovators must find a way to navigate these challenges and keep growing simultaneously.
New research shows the potential for improved security for financial transactions using blockchain-related technologies. University researchers found that Bitcoin’s underlying technology to manage transactions may be more reliable than current financial systems due to its decentralized nature.
