There have been distinct modes of trading from the time humans lived in caves, started cultivating fruits and vegetables, to recently using physical and/or digital currencies. Using Bitcoin while trading could be perceived as an up-gradation to the utilization of credit or debit cards. Doing financial transactions through Bitcoin or its alternative is still niche as the overall schema is gradually becoming popular and utilized across the world. It’s quite early to predict whether decentralization trading would become the norm in the short-term or long-term. But the probability of shifting completely to digital fiscal trading is very much on-the-cards (metaphorically speaking).
A ledger has been one of the crucial building blocks in maintaining financial balance. As the error frequency increased with time in almost every transaction (irrespective of size and nature), adding up the decentralization aspect has become somewhat mandatory. There’re numerous benefits of imbibing a blockchain ledger while trading, and more specifically via bitcoin. One is the decline in error frequency. Another is a low probability of data leak. This piece of research indicates that utilization of ledgers in bitcoin trading which run on proof of work besides digital signatures aid in safeguarding and heightening up the robustness of the activity. In layman words, employing a blockchain ledger makes the overall activity more transparent, simplistic, and decreases the chances of hacker(s) taking control over it easily. The protocol uses a couple of ways for ensuring utmost security at all times like multicasting, the random oracle, synchrony, etc.
Irreversible transaction along with Trust
Besides decentralization, trust is another crucial factor assisting in making bitcoin trading become mainstream just like a Dollar, a Yen, a Pound, a Renminbi, etc. So far, it has been successful in a few industries. With more appropriate alterations, attaining an ideal digital currency wouldn’t be much of a hassle. According to this piece of research, trust can be built in two ways. One is through intensifying the transparency between people and technology. The second one being, trust in people who’re interacting with the technology. Constant modifications to the hashing algorithms is a big factor for users having reliability on bitcoin while using it for trading purpose or even for storage purpose.
Combining quantum mechanics along with bitcoin is like eating a chocolate-vanilla ice-cream instead of eating separately. Intermixing the functionalities of quantum mechanics and bitcoin would assist in replicating complex computational techniques with a decentralization feature being intact. As proof of work is employed to get authentication for proceeding to bestow block data, the probability of a specific network or complete grid getting hacked minimizes. It might be hard to believe but people started experimenting with quantum mechanics way back in the 1970s. Working on a subject like that in such a period was like trying to fix a Honda car engine inside a Rolls-Royce automobile. In the quantum bitcoin framework, the blocks include the details of freshly added quantum bitcoins. The transactions are not included as they’re finalized locally. It should be kept in mind that blockchain, bitcoin, and quantum mechanics all came into existence recently. So, a lot of research and experiments need to be undergone to reach near-perfect functioning capabilities.
A few technical experts in bitcoin and quantum mechanics have been suggesting that quantum mechanics might be somewhat dangerous for blockchain developers. But credit to their proactiveness, they changed their potential threat to an opportunity by mixing their frameworks. By altering the computing power available in the grid and by confirming the proof-of-work, some degree of protection can be intensified. Hashed based schemes also help in avoiding hindrance from third party hackers.
The usage of bitcoin, while trading can also be examined through variations, is its utilization. in this piece of research, the findings suggest that at the moment, people prefer to store and save it for future use rather than using regularly. One reason for it could be that it’s slowly and gradually picking up the pace when it comes to the consumer base. Another factor for velocity variations in bitcoin trading is how the user perceives it ethically and try and imbibe it within their daily practical lives.
A potential future challenge – Pseudo-anonymous Transaction
Just like any product, service, or a platform that’s famous and used widely (in the 21st century) went through hurdles, Bitcoin and similar technical architectures are experiencing similar hurdles. Let’s state the facts as they are. Bitcoin is not completely pseudo-anonymous, rather partially pseudo-anonymous. It has many characteristics among which is ownership of money being implicitly anonymous, but its flow is visible worldwide. To have some clarity in regards to pseudo-anonymousness, it’s appropriate to distinguish three types of models for financial activities:
- A scenario where parties and transactions are ambiguous.
- A scenario where both the parties and transactions as well are known (for example PayPal).
- A scenario where parties are wrapped with uncertainty, but the transactions made are known (for example Bitcoin).
The Unique Selling Proposition (USP) of a Bitcoin is that it’s a chain of activities from one owner to its successor. The owner is located via a public key, which acts as a pseudonym.
Another factor that arises up due to anonymity is regular fluctuations in the value of cryptocurrencies. A better-equipped tool is like a sword. It’s double-edged. Depending on from which side one holds, the result may vary accordingly. Like in the entertainment industry, political environment, stock market, etc, the media majorly have showcased the questionable effects of bitcoin trading. But if accurate algorithms are written, the small percentage of loopholes present in the bitcoin trading will get wiped out as well.
Need some help?
We at PrimaFelicitas will be able to offer a nuanced perspective as our team members are experts in technology and know the inside-out of marketing/business strategy. Our offices are located in those parts of the world where constant innovation is the norm irrespective of industry. As we have been in the bitcoin/blockchain area for over 5 years, and have seen the rise and downfall of ICOs and STOs (to name a few), you shouldn’t hesitate in receiving some help if you’re new to the industry and require some guidance.