Cryptocurrency today as of the time of this writing is in a bit of a flux and identity crisis. Part of this is due to a well directed campaign in the news via government and banking entities. However, I will always give credit where it is due and many of the flaws that have been pointed out by these entities are completely true. In fact, from a business, security and IT standpoint I find that most cryptocurrencies are almost impossible to use. There are coins that individually address “some of the issues” but I have never seen a coin or team that “just seems to get it”.
Whether it’s how an ICO is run, basic functionality, security, privacy, getting out information it seems apparent to me that the vast majority of teams and coins do not sufficient combined IT and Business Knowledge to make things work.
There are just so many issues with a lot of the top coins that could kill them, let me name a few in no particular order.
Speed – 99% of cryptocurrencies are extremely slow taking minutes, hours or several days to complete a transaction!
Expensive – A lot of times you can spend a small fortune just sending a small amount of coin to someone (you could spend $100 to send $5 of coins with some Ethereum tokens for example)!
Security – Most coins are by default completely insecure. Any coin that has a public ledger is insecure and has 0 privacy. This allows for replay attacks and all kinds of nasty things. It also means your activities are easily tracked and traced. Imagine if your competitors can see exactly who is paying and who you are paying including the full amounts? It would put your business at a huge disadvantage. Having “public, permissionless blockchain” such as Bitcoin, Ethereum, Litecoin etc.. will mean the coins can never be secure when the whole public is involved.
Hardforks – Most coins are easily counterfeited, hard or softforked where basically anyone can copy an entire coin and just rename it and call it their own, while confusing and devaluing the original coin holders. This should never be able to happen just for the reason of sanity, continuity and integrity. There have already been scams like the BTG Scam and replay attacks.
PoW/Mining – It is absolutely crazy that mining still exists, as cool as it originally was, mining is now a hindrance in many ways to the cryptocurrency community. Not only is it wasteful in terms of energy resources, it is unsustainable in both environmental, monetary and functional terms. Returns are so slow with most major coins that it is almost not worth it unless your power is cheap or free.
To top it off why on earth should we let transactions be controlled by “miners finding the next block”. It doesn’t secure the network anymore and that is because coins like Bitcoin were created before ASICs and assumed “no one would party would hold more than 10% hashing power”. Of course single pools in China have way more than 10% power and so do some mining farms possibly. This means that pools and large farms could work together to defraud people by sending false transactions and confirming it among themselves. By the time the scam is realized the parties who initiated the scam would already have escaped with the money.
Mining also leads to centralization, the very thing that cryptocurrency was meant to avoid. This inevitable because as difficulty increases, only large corporate or government players with deep pockets can continue.
The same applies with running full nodes, large organizations will be the one running them.
Usability – Most coins are unusable because they are slow and insecure but to make it worse there’s more. The current coins are not easily integrated in a secure way. You shouldn’t have to run a full Litecoin, Bitcoin or Ethereum node on a huge mega server with tons of RAM and HDD just to create receiving addresses and receive payments. This not only inefficient, it is insecure because the same computer that generates the receiving addresses is usually the one that holds the wallet/funds.
To top it off you can send to a wrong or non-existent address and lose your money forever with virtually all currencies. Blockchain is just a big database, couldn’t some query be done to make sure the address actually exists?! On top of that there is no feedback, send by e-mail or notifications by e-mail you always need to keep your wallet open to notice. It would be much easier if these different functions are kept separate. However this is a problem too because most cryptocurrencies are admittedly not secure if you don’t sync the entire chain. And that’s another issue, syncing is a huge issue with coins like Ethereum it is extremely slow and takes a ridiculous amount of CPU cycles. Imagine paying someone from Craigslist in person and one of you says “hold on mate sorry I have to wait for my wallet to sync for hours or days!”.