Bitcoin Lacks Speed, Transaction Throughput for Daily Remittances, Experts Say
While everyone sees Bitcoin as an asset, people are increasingly doubting its utility as a daily P2P payment medium and whether it can make…
While everyone sees Bitcoin as an asset, people are increasingly doubting its utility as a daily P2P payment medium and whether it can make the transition.
“It is no secret that a vast majority of investors, both from the realm of traditional as well as crypto finance, view Bitcoin (BTC) as a long-term store of value akin to “digital gold.” And, while that may be the dominant narrative surrounding the asset, it is worth noting that in recent years the flagship crypto’s use as a medium of exchange has been on the rise.”
“Therefore, it is worth delving into the question of whether Bitcoin’s utility as a daily transaction medium is actually feasible, especially from a long-term perspective, as when compared to other networks like Ethereum, Solana or Cardano, Bitcoin still lags behind in key areas including scalability and transaction throughput.”
One of the more damning assessments is this:
“…despite being one of the most secure networks in existence today, Bitcoin’s remittance capabilities are one of the worst in terms of speed and fees. He pointed out that the asset can only process 5–7 transactions per second (which works out to 3,500 to 4,000 transactions in a 10-minute block). Furthermore, when this transaction number peaked, Christian noted that it could take up to an hour to settle a payment, adding:
“’In terms of fees, the Bitcoin network follows the Supply and Demand Law, with a low of $0.20 per transaction and as high as $50 per transaction during the height of the 2017 bull run. This congestion issue can create a systematic problem for day-to-day Bitcoin payments.’
“And, while the development of layer-2 solutions may help solve some of the scalability problems in question, he believes the network still needs some time before it can become ready to be used for daily transactions.”
Proof of work will simply never scale and while it provides the appearance of security now, the amortized cost to secure a transaction is infinite. Proof-of-stake networks with true finalization can scale up, have low latency, and have a very low amortized cost of security. Those are the characteristics of a network capable of handling global payments and commerce.