Inefficient. The monopoly of the creation of money by a State allows stable control of taxes and economic stability. The uncontrolled offer of bitcoin breaks this principle, making its use inefficient. In addition, analysts echo the huge amount of electrical power needed for digital currency mining. "The use of superior algorithms will further increase the price of bitcoin and have an impact on the electricity market, which will be an important reason for governments to prohibit the digital currency," they explain.
Vulnerable. The bitcoin security protocols are weak and it will be even weaker with quantum computing systems. Although experts recognize that valuable assets have always been the subject of theft, their nature makes them even harder to protect.
Increase of the submerged economy. The use of bitcoin facilitates illegal activity by favoring the underground economy. The advantage offered by anonymity allows operations in the criminal field. The risk that real wealth will be transferred to the opacity of digital currencies "will be another incentive for governments to stop using it."
For these reasons, the analysts bet against bitcoin consolidating as a currency and emerge victorious from the digital currency war that is looming to consolidate. "Other safer digital currencies will take control," they explain. They think that bitcoin design is more likely to end up as a bubble than other competitors. "The history of the stock market is full of examples that show that being the first is not enough to survive against technically superior products," they stress.
The moment of the peak of the bubble is not clear, but a government action could trigger the puncture. "From the political point of view it is much better to puncture a bubble sooner than later because the effect of destroying wealth is less," they say.
The report points out that the countries with the most possibilities of starting to limit bitcoin are Russia, Nigeria, New Zealand, Ukraine, Kenya, South Africa, the United Kingdom or Colombia because of its weight in relation to GDP. Analysts point out that in the case of bitcoin there is a serious risk that its real value will be zero.
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