When bitcoin and other cryptocurrencies will end

The transaction fee in cryptocurrency depends on the specific blockchain network. As of June 14, 2022, profitable transfers were conducted at Solana. The fee was $0.00015 per transaction. Solana can also process up to 65,000 transactions per second. In comparison, VISA’s throughput is 24 thousand.

Anonymity

Blockchains give users the ability to keep their personal information private. To transfer cryptocurrency, only a wallet address will be required (sometimes a Memo is needed). But personal information is requested by various services, vaults or exchanges. This is due to the introduction of AML and KYC anti-money laundering measures. However, there are ways to avoid data disclosure. The user of digital currencies can apply decentralized exchanges and anonymous wallets.

At the same time, blockchain networks are completely open to view. Anyone is able to see every transaction made in them. But information about the initiators of transactions cannot be found.

The anonymity of cryptocurrencies worries the governments of different countries. They have become a tool to pay for illegal services and goods on the Internet.

Development of blockchain technologies

Digital assets are the first successful implementation of decentralized networks. With them, it became possible to rapidly develop the technology. In 2015, smart contracts were created on the basis of the Ethereum blockchain. These programs start working at the moment when predetermined conditions are reached. They can be used for:

• Simplifying document flow.
• Conducting transparent elections.
• Eliminating fraud.
• Fair operation of betting companies and casinos.
• Issuing credit.

The possibilities of smart contracts are high. As of June 2022, many global companies (Visa, MasterCard, Nestle and others) are engaged in their implementation.

Significant disadvantages

New blockchain projects with their own coins and tokens are constantly appearing. But they are still unable to take the place of fiat money. The cryptoasset market has the following disadvantages:

• Software vulnerabilities.
• High rate hikes.
• Lack of regulation.

Vulnerability to hacker attacks

Blockchain networks, cryptocurrencies and smart contracts are software products. Therefore, they may have vulnerabilities in their code. Over $3.2 billion was stolen through hacks in all of 2021 (according to analytics company Chainalysis). DeFi projects accounted for about 72% of the attacks. But if we look at the whole market, it has the following weaknesses.

High volatility

Most coins and tokens are unsecured. Their exchange rate depends on the trust of users. Digital currencies are considered to have high volatility in the market. This makes it impossible to use them in settlements. Therefore, as of June 2022, they are unable to replace fiat money, which could lead to the end of cryptocurrencies.

Stablecoin is a token backed by another asset. For example, the price of Tether (USDT) is pegged to the value of the US dollar (1 to 1).

Unregulated market

The main advantage of crypto-assets is decentralization and lack of control. But on the other hand – it can be seen as a disadvantage. The cryptocurrency market has become a tool for fraud and other illegal activities. Governments of different countries take measures to regulate the market. However, there is no unified understanding of this process. Therefore, states have endowed cryptocurrencies with different statuses (in Russia, they are considered property).

The problem of the quantum computer

Its advantage over conventional computing devices is the ability to quickly digest data. This poses a threat to blockchains based on cryptography. But quantum computers are not so simple. They work on the superposition effect, when a particle is in two or more states at the same time. However, when you try to record the result, the superposition breaks down. The particle assumes one single state. In quantum mechanics, this is called the observer effect.

It is likely that such a computer would crack the blockchain. But in an attempt to use the result of the calculations, the client will get one random answer. And because of the large number of possible outcomes, it will often be wrong. This makes a quantum computer useless for hacking a blockchain network (as of June 2022).

Should we expect the end of bitcoin and cryptocurrencies

Central banks of different nations are interested in controlling money. Therefore, the replacement of fiat currencies with crypto-assets is still far away. But part of the experts believe that it will eventually happen. For example, Peter Thiel (founder of PayPal) in 2023 at a conference in Miami said about the inevitability of replacing fiat with cryptocurrencies. He believes that the central banks of countries around the world are on the verge of bankruptcy. This will eventually lead to the adoption of digital assets. He also stated that the cryptocurrency market is more honest and efficient.

Whether the end of bitcoin and other coins will come, it is impossible to predict exactly. But some experts, politicians and financial institutions agree that crypto-assets will have an impact on the traditional monetary system. They will become a component of it.

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