Bitcoin has an image problem. A big one.
And it's holding the virtual currency back from going mainstream, said Hank Lucas, a professor at the University of Maryland who focuses on disruptive technologies.
"It's hard for me to say that bitcoin is going to be the dominant virtual currency of the future," Lucas said. "If someone came up with a virtual currency that people understood and whose value did not fluctuate as much, well, then it might become the one adopted by the masses and not bitcoin."
There's certainly no shortage of alternate digital currencies—Namecoin, Litecoin and Dogecoin, to name a few. But bitcoin is by far the most popular and widely used of the bunch. Yet, it's too early to tell if its popularity will last, Lucas said.
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One reason bitcoin has gained the level of traction it has is because merchants don't have to pay transaction fees, Lucas said. It's also popular with consumers because it gives them more anonymity when making purchases, he added.
But despite its growth, most people remain skeptical of the currency, Lucas said.
"One of the biggest problems for bitcoins is people don't understand how they are created and that's not going to lead a lot of people to adopt it," he said.
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Basically, bitcoin could turn out to be the Napster of digital currency, Lucas said. It could be the currency that leads the shift to digital payments, but fails to go mainstream because a competitor markets itself better and provides more security for consumers, much like how Apple's iTunes appealed to consumers over Napster.
Considering the recent failure of the popular bitcoin exchange Mt.Gox—which caused the loss of almost $500 million—and the dramatic price fluctuations for the currency, it's no wonder people might be afraid of adopting it.
"I think its a big problem for consumers," he said. "If a bank fails you get your money back, or at least part of it, but when Mt. Gox failed, there was nothing there. ... This has to discourage people who don't understand a virtual currency."
"You never see an ad for bitcoin. You don't see bitcoin pushing itself out there," Lucas said. "But if there was a digital currency that could market itself in a way consumers could understand, it could become the digital currency of choice."