Bitcoin is a virtual monetary system which is a peer-to-peer currency with no central bank. It is based on digital tokens with no intrinsic value.
The currency’s wild volatility is the major concern for the users; after peaking at $1200 in 2013, the value of bitcoin sits below $250 today. The instability of the currency damages the idea of bitcoin, keeping many financiers such as hedge funders and banks away from it.
Another major criticism is security. Recently, the Slovenian exchange was hacked and $5M was lost, followed by a $400M hack at Tokyo’s bitcoin exchange Mt. Gox.
Risk of Unknown and Technical Flaws
Many issues are surfacing, like unexpected flaws due to hardware crashes or viruses that corrupt bitcoin wallets and lead to loss of bitcoin.
Since there is no central authority governing bitcoin, no one can guarantee its minimum valuation. If a large group of merchants decide to “dump” bitcoins and leave the system, its valuation will decrease greatly which will immensely hurt users who have a large amount of wealth invested in bitcoins.
Because of these security and volatility concerns, many startups are taking a step back in bitcoin payments.
Gyft, the California-based startup integrated bitcoin in 2013 and saw a trend in the bitcoin payments, witnessing 90% of sales through this payment method. But now things have changed; PayPal and credit card purchases now account for 90% of sales. Despite CEO of Gyft Vinny Lingham having a front seat to bitcoin being used as payments, he now doesn’t see the bitcoin as a platform for payments. During a recent interview with CoinDesk, he said, "There's an unknown amount of demand, but a lot of speculation, so the price fluctuations are pretty intense and because the demand side of the equation is not fully calculated yet, this is why there is so much uncertainty in the bitcoin world.” According to him, bitcoin will become a currency when its supply and demand are balanced and an industrial use case is found.
Gyft is a digital gift card platform that lets you manage your gift cards in addition to enabling businesses to offer easy reward and loyalty programs. It is the #1 trusted mobile gift card app company based in Redwood City, CA. They focus on innovating the mobile gifting space to change the way consumers think about gift cards.