Today, Bitcoin isn’t always the currency of choice in moving value. Some transactions are taking
days instead of 10 minutes, and the average
transaction cost recently reached
$4.50.
The Bitcoin network is currently at a turning point. 1 MB blocks are no longer a sustainable length to enable fast and affordable transactions.
When the network flirts with full capacity, miners are incentivized to settle transactions with
higher fees, leaving behind less important transactions.
The actions that can be taken to prevent this from happening are currently competing for miner approval.
Indeed, opinions within the community are divergent. Some support Bitcoin Core’s
SegWit and others Bitcoin Unlimited, or even an increase to 8 MB blocks.
Unpleasant truth
Bitcoin has made a nice rally lately, doubling its initial unit price in one quarter.
However, this rally is hiding an unpleasant truth. The Bitcoin community is engaged in a battle and the situation is already having a negative impact on the currency.
Bitcoin was initially promoted as an inclusive system, with fast settlement times and low transaction fees. It was even compared to Visa to bring out its strong capabilities.
But today, the scalability problem is creating some impatience in the user experience, which might push participants to move to other coins for their transactions.
This will cause Bitcoin to lose popularity and momentum, instead of growing and scaling up.
Startups are eyeing altcoins
Some companies and startups have started looking at
altcoins as an alternative to Bitcoin.
As an example, the Brave browser first started on Bitcoin, before launching its own Basic Attention Token (BAT) based on
Ethereum.
The social network Yours shifted from Bitcoin to
Litecoin to avoid higher transaction fees.
The Irish gift card company BitCart had to drop Bitcoin as a payment means because it started taking more than 24 hours to settle, and the business couldn’t afford it.
Some companies are even creating their own cryptocurrency. That is the case of the messaging app Kik, which is developing
Kin on Ethereum.
“A lot of people aren’t using Bitcoin anymore. People are moving their coins out of bitcoin, converting it to another coin.… If Bitcoins were performing and executing on all cylinders two years ago and meeting the demands of all its constituents, would we have these other coins at all? Bitcoin had all the market share. Today it doesn’t,” says Mike Belshe, chief executive officer of BitGo.