Some weaknesses of current crypto currenciesDecember 17, 2023
Weaknesses of current Crypto currencies
Crypto currencies are very strong in some areas, but there are also obvious areas of weakness. Especially compared to the current Banking and Card Payments, the advantages and disadvantages are more obvious. In my opinion, crypto currencies should fix these.
1. High gas fees
In Blockchain like Ethereum, the cost of exchanging coins is too high. If it weren’t for this very expensive mining fee, crypto currencies would probably have grown tenfold. Decentralized exchanges, especially NFT and GameFi, can be much more successful than they are now. Although this problem seems to be a problem only with ETH Blockchain, ETH Blockchain is a leading Blockchain and many famous crypto currencies and Dex are based on ETH Blockchain. Many popular crypto projects such as Axie Infinity, Decenterland, Uniswap, Maker DAO, etc. are on the Ethereum Blockchain. Ethereum Blockchain’s high Gas fees can slow down the progress of everything. Currently, the Ethereum Blockchain is trying to transform ETH 2.0 into a faster, cheaper way. This will benefit the entire crypto currency market.
2. Security Design
Crypto currencies are originally designed to be peer-to-peer wallets, and it is not very safe to provide other services through third-parties. Currently, crypto exchanges have been hacked and lost millions because of this problem. This issue has caused the entire crypto market to lose confidence and cause volatility. Especially when using smart contracts, it needs to be very secure in terms of security design. We have to carefully weigh the security design of blockchains so that they don’t break, and that they don’t affect development.
Blockchain and crypto currency are not the same. There are even more theft attacks in banking and card payment that are currently being used. However, one advantage of banking and card payment systems is that it is easy to add additional functions for security such as two factor authentication, one time password, biometric, etc. The problems in the system design are related to the operation process. Another thing is that banking and card payments are centralized systems, so they need to be controlled from the center. Stolen money can be stored so that it cannot be easily withdrawn. So, the thief can be arrested easily.
In fact, if extra authentication is added to Blockchain, it is possible. But since it is a decentralization system, it will be necessary to carefully design the system. If not, it might make the medicine worse. Another issue is how secure Blockchain is. De-Fi apps, such as wallets, need to be secured on the front end as well. Even if there is no problem with the backend Blockchain, if there is a problem with the front end application, it will not prevent theft. It is not easy for the Blockchain side to ensure that every application connected to the Blockchain is secure. The API design will need to have a special security design and add extra factor authentication. This can make it difficult for De-Fi apps and Dex to connect to Blockchain.
3. Scalability problem
One of the problems faced by current Layer 1 Blockchains is scalability issues. When hundreds of thousands of transactions occur simultaneously, the network’s performance can slow down. In Blockchain technology, the nodes can perform many additional functions and perform extra processing and network traffic far more than the current Banking and Card Payments. According to the consensus algorithm that can approve transactions, we have to do expensive work such as encryption and hashing. Decentralized systems are much more powerful than centralized systems, but the extra work of Blockchain technology may not pay off very quickly. Until this issue is resolved, crypto payments may lag behind banking and card payments. Currently, in trying to solve this problem, Layer2 network solutions, partitioning and approving networks, etc., are being devised based on Blockchain. However, there are some cases where this kind of creativity is no longer decentralized and is returning to a centralized system. Security breaches can also lead to more complex and vulnerable system designs.
4. Regulations problems
Crypto currency is not meant to follow regulations in the first place. It tried to create only independent money. If it tries again to comply with the regulations, it may have to redo the entire system design. If the system design is not modified and used in accordance with the regulations, there may be new problems that cannot be foreseen. Almost all current crypto currencies are based on an independent financial system, the essence of Bitcoin BTC. It sees two problems in complying with the regulations.
One problem is that regulations can change soon. Can’t vary by country. It is not easy to do this in Blockchain technology. The more changes in decentralized systems, the more problems. If you want to do it on tens of thousands of scattered nodes, it is better if there is no change.
Another problem is that regulators are weak in technology. How blockchain technology works can only be understood superficially. I can’t understand the problems I have to face in development and design. This can’t be explained to understand. On the other hand, scam coins such as crypto currencies are constantly trying to steal money from the pockets of ignorant people. Therefore, the issue of regulations will become very complicated in crypto currency. It is impossible to predict what will happen until a certain period of time before it is mature.
5. Maturity problems
Crypto currencies are still very fragile in my opinion. Blockchain technology itself is not yet mature. In fact, crypto currencies don’t even have to compete with each other’s features. By believing in cooperation to improve Blockchain technology, we can bring about more beneficial results. If it really becomes a real decentralized system, there is no reason to compete, only collective action is needed. Each blockchain has its own advantages, and each project may receive a project that is not a better fit for it. Pursuing financial gain over technological progress may slow down the development of Blockchain technology in the long run.
Due to the support weaknesses of the current technology, we still cannot go to the real decentralized system, and because of the projects that rely on the centralized system, there are cases where the real advantages of the decentralized system cannot be revealed. Because a decentralized system cannot be a decentralized system if there is a centralized system.
Another thing is that those who are currently investing in crypto currency still want to know more about Decentralization about Crypto currency and Blockchain technology than they currently do. Otherwise, you will be making the wrong investment and you will not be able to properly analyze the issues. Maturity is a matter of time that can only be solved with experience. It takes time to mature. At present, central banks, governments, From businesses to ordinary people, they are interested in crypto currency, but the efficiency of Blockchain technology behind it and the revolutionary changes that Decentralization will bring may take a lot of time.
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