Pros and Cons of Using Bitcoin as Payment Mode

Mostly with issue of secured online transactions via debit card or credit card, it allows a hacker to reveal a 16-digit card number, expiration date, and then a 3-digit CVV number. Solutions which including online payment methods (PayPal), aim to resolve this flaw by forcing the customer to enter a username and password in order to be authenticated. Passwords, on the other hand, have lower probability and are often reused through various websites. A single compromised login database will lead to an intruder impersonating the consumer on websites that reuse these passwords. Several people are doing crypto trading these days. Still, it is hard to find which platform is best where minimum risks are involved, like crypto markets.

Finally, the underlying problem for most internet purchases nowadays is that the consumer lacks accurate financial control. Until accepting transfers from their bank accounts, customers are expected to trust their bank primarily to store their money and even correctly authenticate it. In reality, whenever a fake payment is made, the buyer will be required to show that it was not their fault. Or controversially, the bank’s solvency is a vulnerability that will deplete consumer deposits before the start of online payments. For over thirty years, digital cash study has been fueled by inadequate protection standards for online payments and the absence of an analog for cash on the internet. Unfortunately, neither of the suggested schemes were implemented for various purposes, including their dependence on banks to issue digital coins and digital coins’ restricted attractiveness. Portable computer systems had not yet entered the mainstream. There was no demand for financial privacy when making online purchases.

Issues with Bitcoin Online Payments

Following are some of the issues which people face while doing online transactions of bitcoin:

  • Pseudonymity

Despite assurances of anonymity that connect Bitcoin usage to the dark web, Bitcoin is not private. There is a severe lack of financial privacy. According to research, Bitcoin provides pseudonymity. It is possible to connect two or more Bitcoin addresses over the same person using transactions added to the Blockchain. In reality, several firms, such as Chain Analysis, deliberately seek to de-anonymize consumers via Blockchain transfers in order to assist businesses in complying with anti-money laundering regulations. To reduce the privacy leak, it is proposed that each transaction be sent to a new Bitcoin address.

  • Limited Throughput

Bitcoin can only accept 3.3-7 transactions per second primarily due to an artificial limit set by Satoshi Nakamoto to avoid spam attacks that could stifle its development. Removing this arbitrary limit is a controversial problem in the community since it necessitates almost all commercially involved network customers. To address this concern, representatives of the group introduce alternate protocols, namely the Lightning Network, which uses Bitcoin as an adjudicator to settle conflicts and offers a way for two users to share thousands of transactions anonymously. If any person disputes the final amount of their purchases, the conflict will be resolved in the Blockchain.

  • Loss of Bitcoins

As previously said, the wallet app is in charge of handling the user’s network keys, and this wallet must be safely backed up on paper or reliable hardware tokens like Trezor. If the user’s personal computer fails and their wallet was never backed up, connection to these bitcoins (dubbed “zombiecoins”) is lost permanently. Overall, there is no single body in charge of keeping bitcoins secure or authenticating users in order to regain entry.

  • Online wallets

People are using online wallets which host their passwords on reputable wallet websites due to the possibility of losing bitcoins and the burden of preserving their protection. This mimics banks’ function in that access to a user’s bitcoins is controlled by passwords and two-factor verification. Unfortunately, there is a tradition of heists robbing large amounts of bitcoins or online wallet services just vanishing with consumer funds in Bitcoin. MtGox is a perfect case, accounting for more than 70% of network transfers at one time. It announced bankruptcy in February 2014, claiming that 850k bitcoins were stolen due to a flaw in Bitcoin. The research offered publicly verifiable proof that a Bitcoin malfunction did not cause the MtGox depletion, and it is still unclear why these bitcoins vanished.

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