4 reasons why cryptocurrency wallets are not there yet

4 reasons why cryptocurrency wallets are not there yet

Cryptocurrency wallets are a revolutionary concept that is already changing the world – but is it perfect? These wallets continue to be plagued by a lot of issues that make its mainstream adoption difficult.

Cryptocurrency wallets have been in place for a decade now, but have failed to encourage large-scale adoption with the masses. They require wallet users to be well versed with computer security features and are sometimes too impractical to be used as a solution for small retail transactions. But that’s not it. Given here are four critical reasons that give a more comprehensive understanding of why cryptocurrency wallets are not there yet.

1. Cryptocurrency wallets lack security

Though cryptocurrency wallets are built to be secure, the level of security varies across wallets. The inconvenience with digital wallets is that if the cryptocurrency exchange gets hacked, then it becomes very easy to get hold of the money, as there is no password that is tied to the wallet. Usually, there is a single wallet file containing numerous unique addresses tied to a single user account. The problem escalates when the hacker gets hold of the wallet file because the money is gone for every user account that is connected to that wallet. Thus, one can clearly envision that her cryptocurrency wallet is one among thousand others that are threatened until a strong security mechanism is in place.

2. Cryptocurrency wallets do not deal in non-cash assets

Cryptocurrency wallets deal with storage and management of cryptocurrencies such as Bitcoin and Ethereum. But most cryptocurrency wallets do not support elements of a ‘programmable economy’ such as non-cash assets, IDs, information, and smart contracts to name a few. Moreover, they can neither exchange loyalty points, nor transfer value to/from cryptocurrencies. Moreover, the wallet is not compatible with businesses that do not deal with bitcoin or ethers and hence completely ignore them.

3. Cryptocurrencies have unreliable rate of transaction

One of the biggest problems with cryptocurrencies is their slow rate of transaction. With the rise of cryptocurrencies, the size of blocks being added to the blockchain is increasing. The network is now approaching an oversaturation, greatly hampering the rate of transaction. Currently no block is more than 1MB, and this is making transaction confirmation highly unreliable. The Bitcoin XT version has offered to increase the block size limit to 8MB which can hopefully reduce this lag in future.

4. Cryptocurrencies Are Volatile

Cryptocurrencies are extremely volatile in nature. For example, the price of bitcoins rose by 8,313{b55092ad7b81eb92f88b6b638548833c1a19eaad7c20d5c60cae32e453b03222} and then collapsed to half of its value between January 2013 and November 2013. This is why cryptocurrencies are often used by speculation but are not used for long-term savings. Moreover, for the very same reason, they are considered more of an investment than a means of payment. As of today, cryptocurrencies are mined, which means that users are encouraged to hold on to their money until the value increases. Thus, users are rewarded for generating currency. But for cryptocurrencies to truly become a means of payment, users need to be rewarded for using the coin. For instance, whenever a user transacts, a small amount of extra currency can be added to the wallet which will eventually make the users who buy and sell the products wealthy.

Cryptocurrency wallets have the potential to replace the existing banking system, but this transition is not simple. These wallets need to entrust a certain level of confidence among the users and need to take the programmable economy in their purview, only then can they be used across everything

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