The Biggest Problem With Bitcoin, And How You Can Fix It

 The second layer of the Bitcoin network, known as the Lightning Network (LN), allows for off-chain transactions—transactions between parties not using the blockchain. Lightning Network has frequently been hailed as a game-changer in the development of cryptocurrencies. It is intended to shorten the time it takes to execute transactions and lower the blockchain's related expenses. In 2015, Thaddeus Dryja and Joseph Poon, two developers, came up with the idea for the lightning network.

Despite the Lightning Network's expansion and improvement since its beginnings, difficulties still exist. Bitcoin's price swings have kept the cryptocurrency from taking off as a common form of payment for consumer and commercial activities. Additionally, as transactions still need to be completed on the blockchain, there are expenses associated with using Lightning Network.

In this essay, we'll discuss three issues the Lightning Network is now dealing with as well as why it's necessary. We also examine the Lightning Network's future by looking at current technical advancements that might affect and enhance the network in the future.

1. What kind of power is used?

According to the Cambridge Centre for Alternative Finance, which keeps a rolling estimate, Bitcoin's predicted yearly power usage increased from 6.6 terawatt-hours at the beginning of 2017 to 138 terawatt hours at the beginning of 2022 – more than a nation like Norway. In terms of carbon emissions, Digiconomist estimates that Bitcoin mining produces 114 million tonnes of carbon dioxide annually, around the same as Belgium.

There is no regulating power. 

The government creating fiat currency puts up a strong defense for it. To maintain the stability of their national currencies, central banks engage in "market operations" on the global monetary markets by buying or selling. A currency cannot function without stability.

Bitcoin is a terrible currency because of its erratic value. No matter how many suppliers claim to accept it, it is not. Consider it this way: Would you buy anything with your Bitcoin, if you had any? Not at all. Simply use fiat currency. You didn't purchase Bitcoin to use as money, which is why. You purchased it in the hopes that its value would increase as a speculative investment. You wouldn't use Bitcoin as payment since you think its value will increase by 20% in two weeks. Because they don't want the value to drop by 20% a week later, businesses will stop accepting Bitcoin as payment when it starts to decline.

Volatility

Since its start, Bitcoin has been very erratic. When I estimated the value of $10 worth of bitcoin in 2010, I stated that it would be millions of dollars now. A bitcoin's value has more than doubled since I wrote that essay less than two months ago, and the volatility isn't slowing down.

This climate has made bitcoin very popular among investors who purchase bitcoin in the hopes that the price would climb, but it isn't boosting bitcoin's acceptance as a form of payment. If I decide to keep $1,000 in spending money in Bitcoin for a two-week vacation, for instance, its purchasing power may increase or decrease dramatically by the time I travel.

These significant barriers to the widespread adoption of Bitcoin are listed.

In the eight years or so that it has been around, Bitcoin has gone a long way, but there is still a long way to go before it is universally accepted as a form of payment for products and services. Here are the top seven obstacles to Bitcoin's widespread acceptance and what has to change for people to start utilizing virtual money extensively.

The development of Bitcoin

Wall Street had significant problems with subprime mortgage security, as the 2008 global financial crisis demonstrated. The current financial system was heavily bailed out by the government as a result. Banks were thought to be too secure to fail. Additionally, printing ever-increasing amounts of fiat money was the only option contemplated by individuals to escape difficulty. The result would be a devaluation of currencies.

An alternate concept, the Bitcoin white paper, was developed by a person who goes by the pseudonym Satoshi Nakamoto. The goal was to create digital money that is not governed by a centralized organization.

Value Changes of Bitcoin 

Continually changing in value in response to demand is the bitcoin currency. A well-known Bitcoin exchange platform pegged the value of one Bitcoin at $9.9 as of June 2nd, 2011. Just six months earlier, it was only worth pennies. Bitcoin-accepting websites' prices will fluctuate constantly as a result of this volatility. Also, if a product refund is issued, there will be a great deal of uncertainty. For instance, if a T-shirt was first purchased for 1.5 BTC and returned a week later, should 1.5 BTC be refunded even though the worth has increased, 

Having a criminal record

Particularly in its early years, Bitcoin was well-known for being used to buy illegal goods, launder money, or conduct business on the Dark Web. It also makes logic. Bitcoin became the obvious choice for anyone looking to purchase illegal goods such as drugs, and firearms, you name it, as it is the only real anonymous method of payment. Fair enough, it will be challenging, if not impossible, to properly resolve this issue given that it comes from an anonymous payment source.

 Are Bitcoin's emissions decreasing then?

You can't tell. The China prohibition in June 2021 forced Bitcoin miners to look elsewhere for cheap, dependable electricity as they were cut off from the nation's clean, copious hydropower. Some Americans opened up shop close to renewable energy sources. Others showed up in nations like Kazakhstan, where fossil fuels still make up the majority of the energy mix. Since no one is certain of the particular location of every miner or the type of power they consume, it is unknown how all of this will affect Bitcoin's carbon emissions. However, a report published in the academic journal Joule in February claimed that Bitcoin's environmental effect had gotten worse since China's decision, with the proportion of renewable energy utilized to operate the network dropping from more than half to less than one-third.

One benefit of Bitcoin is its anonymity, but there is a chance that it will be used illegally.

Conclusion

The biggest problem with Bitcoin—its energy-intensive mining process—can be mitigated through a combination of technological advancements, shifts in consensus mechanisms, renewable energy integration, and collaborative efforts. By adopting these strategies, the Bitcoin network can remain secure, decentralized, and environmentally sustainable, paving the way for its continued growth and acceptance on a global scale.