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Why Cryptos Are Not Commonplace Yet and Are They Actually the Future of Money

Digital money has a lot of clearly visible and proven advantages, but it is still not widespread enough to secure itself an established position on par with fiat currencies in the world’s financial market. The financial revolution does not come easy, and developers still have a number of crucial issues on their hands with no ready solutions.

The market is constantly growing and evolving, but digital money has no practical value for most people at the moment. Even though cryptos have been recognized as a viable means of conducting some of the less common online transactions, like purchases in video games or playing online video poker for free and for real money, few people use Bitcoin for everyday spending. The skepticism is still rampant – scientist Nicholas Weaver even suggested that the “best” use for cryptocurrencies was to simply burn them down.

The specialist explained his position in detail: the cost of transactions in the Bitcoin network is often much higher than that of bank cards. This is especially noticeable for small purchases when the commission exceeds the price of a good or service. Charles Hoskinson, the creator of Cardano and co-founder of Ethereum, decided to finish off the first cryptocurrency. According to him, BTC is a blind and deaf-mute currency with no prospects. The main problem the programmer singled out was the lack of centralization – it’s not clear who decides what, which leads to chaos.

We conducted our own research on what other global problems digital money faces nowadays. It turns out, there are many more than this article can contain, but we managed to single out the most pressing matters in the sections below.

Scalability and Regulation

Some analysts argue that the main trouble with digital money comes from the lack of scalability (the system’s ability to cope with increasing loads). Companies won’t switch to blockchain until it’s proven that it can solve real-world problems. There’s no way yet to prove that blockchain has that scalability – for that to happen, some big company has to switch to it. It’s very much like a vicious circle.

The second important problem that needs to be solved soon is legal uncertainty. Today, most major states have established an intermediate approach to regulating the digital money market and allowed its existence, limiting the properties of cryptocurrencies – eliminating anonymity, controlling decentralized issuance, and so on.


The viruses threatening online finance were created back in the days of the first electronic payment systems (WebMoney, PayPal, etc.). The existing malware is adapted to the cryptocurrency market and can be activated wherever the opportunity arises. The most common methods of stealing cryptocurrencies are ransomware, viruses, fake links (spoofing), and phishing (unauthorized access to personal information). Owners of digital money should be extremely vigilant and try to stay one step ahead of malware – use reliable anti-virus protection, check all addresses, and do not click on suspicious links.

Hacker attacks

Cyberattacks are the second-largest problem and a frequent phenomenon in the world of cryptocurrencies. Hacker attacks are becoming more frequent, and the methods of fraud are becoming more sophisticated. Bitcoin wallets and large amounts that circulate on exchanges have become particularly attractive to thieves. Cryptocurrency exchanges have been repeatedly hacked, causing many to close due to bankruptcy.

The International Securities and Exchange Commission has confirmed that more than half of the platforms have experienced cyberattacks. For example, in 2016, hackers gained unauthorized access to the digital wallets of members of the hedge fund DAO and stole more than $150 million due to a code error. Another well-known case: hackers bypassed the security system and switched the user verification methods at the well-known Bitfinex exchange – then they stole $70 million.

According to experts, the problem of security in the world of cryptocurrencies for a long time will remain looming on the horizon. “I am skeptical of any idea that can supposedly solve the security problem. In my opinion, no technology or mechanism can protect cryptocurrency from hacking and fraud,” said Tyler Moore, associate professor of cybersecurity at Tulsa University, who plans to publish a new study on the vulnerability of cryptocurrency exchanges soon.

Legislative Framework and Legal Risks


Why Cryptos Are Not Commonplace Yet and Are They Actually the Future of Money

The situation is aggravated by the absence of an insurance system for investors. They cannot claim reimbursement of losses, despite the fact that some exchanges are positioned and act as virtual banks.

Bitcoins are intangible digital codes that have no ownership rights. If they are stolen from a virtual wallet, the owner can neither identify the thief (because they are anonymous and decentralized), nor prove his or her right to the coins (because there is no law on such personal property). The situation is similar when transactions are made in the name of an unscrupulous party. And if bitcoins are invested in a company that goes bankrupt, the owner will also have no way to get them back because the contract is made on a handshake.

However, investors so far have no choice but to do business with exchanges that do not have their own capital to insure losses, like regular banks, whose activities are regulated by law.

“When a bank customer’s account is hacked, there is always a third party ready to step in to deal with the problem. But this is not the case for cryptocurrency exchanges. Rather, because of the ‘virtual’ features of digital coins, they will never be completely secure,” said Bob Goodman, executive director of KeepKey. No one is offering cryptocurrency insurance, although there are many projects in development.

Bankruptcy and Closure

In the previous 5 years, about 48% of cryptocurrency exchanges closed – some of them very promising.

“Of course, closing 48% of exchanges is unacceptable, but given that Bitcoin is a relatively new technology, it’s not surprising,” said Richard Johnson, vice president of Greenwich Associates.

At the time the sites were shut down, users had no opportunity to withdraw money from their accounts, resulting in multimillion-dollar losses. And it wasn’t always due to hacker attacks.


 This is the main reason for the collapse and a pressing problem for most cryptocurrency exchanges. Many simply can’t provide enough fund turnover to stay afloat for a long time. According to Eric Voorhees, founder of the exchange ShapeShift:

“There has to be $100,000 to $1 million worth of currency exchanges every day. You have to charge certain commissions for trades to have at least $25 million in equity.”

And this is just a small part of what is required for the full functioning of the service.

Technical problems

Technical failures of Bitcoin wallet platforms are quite common. Investors who suffered losses cannot claim a refund regardless of whether the problem was caused by malicious hackers or negligence on the part of the operator during software development.

No Indemnification Guarantees


Why Cryptos Are Not Commonplace Yet and Are They Actually the Future of Money

When carrying out operations through the exchange, the user does not actually own the funds stored on their account – the assets belong to the exchange and are controlled by it. The exchange only provides access to them when logged in. Thus, the owner fully trusts his Bitcoin wallet to a third party, relying on the security measures it takes to protect the money.

Users of the Bitfinex exchange lost 36% of their assets due to a cyberattack. The exchange was later re-launched, and in order to retain customers, reimbursed the affected funds with BFX tokens (the value was relevant to bitcoin at the time of the hack) and then repurchased them.

MtGox (Tokyo) went bankrupt after the 2014 hack and also promised to compensate investors, but the situation has not yet been fully resolved.

Alas, such cases are isolated. Most investors who lost crypto assets on other platforms never saw them again.


The benefits that cryptocurrency provides are undeniable – decentralization, anonymity, instant transfers, and low transaction costs have always been named the strengths of digital money. Despite all that, it is still remaining a niche instrument rather than a mass one. The experts identify four key factors that contribute to this state of affairs:

– Legal uncertainty in the issue and use of cryptocurrencies, as well as with taxes for the use of this asset.

– Instability of cryptocurrencies. Coins are perceived as a too risky financial instrument. This scares away professionals and, even more so, ordinary people.

– The third factor is partly related to the previous one: the exposure of cryptocurrencies to the information background, which can be very negative. Any events or official statements related to the regulation of digital money (its prohibition in any state or criticism from the authorities) or to the stability and security of its circulation (for example, news about thefts from cryptocurrency exchanges) strongly affect not only the rate but also the general image of this instrument. Until there is stability in terms of state recognition of cryptocurrencies, it is impossible to talk about its wide dissemination.

-The fourth reason is the low level of awareness and financial literacy in society on the one hand, and insufficient financial competence of the participants of the crypto market themselves on the other.

In the vast majority of cases, cryptocurrency is perceived simply as a speculative asset, which, due to its high volatility, allows for making good money. But this is a very narrow approach that ignores most of the potential of cryptocurrencies for the economy. People need to learn about what kinds of cryptocurrencies exist, what their features, advantages, and disadvantages are, and how to use cryptocurrency as a means of payment. Now the vast majority of the population knows nothing about it, and this, of course, is a big barrier to the mass adoption of cryptocurrencies.

Market Collapse

No one can guarantee the success and longevity of cryptocurrencies. On the one hand, they are accepted on par with fiat money, and on the other, they are not subject to any control. They are not as tangible as the dollar or the euro, but there is a prospect that soon they can be withdrawn through an ATM and put in your pocket, like regular money. For now, however, they exist only in virtual form and are used far less frequently than fiat currencies.

The value of digital coins naturally changes over time, but there is no guarantee that rapid growth at some point will not turn into an equally rapid decline (rollback). Consequently, there is the possibility of a return to “zero” in both the short and long term. Prices are volatile, and a decrease in the rate may be provoked by almost any political or economic factor – such events are usually very difficult to predict.



Why Cryptos Are Not Commonplace Yet and Are They Actually the Future of Money

Apart from poor awareness and illegality of digital money in a number of countries, another problem of cryptocurrencies lies in imperfect infrastructure. For example, electronic wallets do not always meet the needs of users who are in the business, and even more so when it comes to people who are distant from the blockchain industry, the experts explain.

It is worth noting that BTC remains the most popular cryptocurrency for transactions. It is convenient for cross-border payments because it avoids bureaucratic delays – but it cannot be compared to VISA and MasterCard in terms of speed and practicality. Other blockchains are low-liquid, which makes it difficult to use them as an instrument of mutual settlements in general.

Cryptocurrencies will definitely be used in the foreseeable future in one way or another. The digital money market is very young, its active development began in the last three years, and now major players are gradually beginning to enter: Facebook is planning to issue its stable coin, Telegram is preparing its blockchain, etc.

Cryptocurrencies as a type of payment are definitely promising because they allow instant transactions within a single application. Over time, plastic cards may fall into oblivion – but for the mass adoption of cryptocurrencies, we need to solve the aforementioned problems.

Experts do not conceal the fact that digital money has serious problems, but it is the age of the market, its early stage, that gives hope that everything can still be solved. Even the most seemingly dead-end situations seem to be quite fixable. The industry has transformed greatly in recent years; it has become more serious and large, and governments and corporations can no longer ignore it. Now it’s entering the next phase of development – how successful it will be and how long it will last, no one knows.