Why Bitcoin Is Killing Itself
There is no question if cryptocurrencies are here to stay and there is no choice but to admit bitcoin is the king of cryptocurrencies. I love it. It creates a fun environment to play in. Moving coins around into other currencies and making profits. It was a cool feeling being the only one of my friends who knew what it was and how it all worked. I enjoyed explaining to people what a blockchain was and arguing how bitcoin is backed by the people. It was exciting to show my gains to other investors and listen to them say over and over that bitcoin will fail.
Fast forward to 2017, 5 years later, and it is becoming a little less fun. I started padding my bitcoin stash by teaching a little English online. My wallet was receiving several small transactions a week. I could fill my Steam account with video games and find products online to purchase. All of a sudden something happened. Bitcoin got too popular.
The average fee for a bitcoin transaction, as of today, is approximately $25 dollars. The blockchain is clogged. Fees are outrageous, Steam has dropped the acceptance of the currency and you are penalized for accepting many smaller transactions. To give an example, if you go into a store and purchase a pack of bubble gum with a 1 dollar bill the transaction is pretty easy. If you give the clerk 100 pennies then it takes time to count those pennies. With the current wallet I use my fees are well over 50 dollars because, in the bitcoin world, I'm paying with pennies. What good is a 50 dollar gift card if I have to pay 50 dollars in fees? Bitcoin isn't the only one suffering from this bottleneck.
Recently Amazon registered domains related to Ethereum, another cryptocurrency, and the price seemed to rise from 300 to 600 USD and it is still going up. At the same time, a mobile video game by the name of CyproKitties began accepting Ethereum for in-game purchases causing a massive bottleneck in the blockchain. This is all leading to one common problem. Cryptocurrencies are having trouble keeping up with demand. What was once a cool and unique experience is now being embraced by the masses, and it is slowing everything down.
The only solution I can foresee is if companies willing to accept bitcoin create a prepaid card or online wallet. For example, if a company such as Amazon accepted the coin then one could put 500 dollars worth of bitcoin into the account. Amazon could then allow 500 dollars worth of purchases at any time the buyer chooses to do so. That way there is only one bitcoin transaction but potentially many purchases. This still creates its own problem of having to still pay high fees unless you are willing to patiently wait, quite some time, for the purchase to be validated through the blockchain. People will also have to keep track of several prepaid accounts for every business. As we have already seen with Steam, it is too volatile to gage. The cost of something can fluctuate 100s of dollars because of the high peaks and lows the cryptocurrencies experiences from one hour to the next.
I still enjoy the concept of cryptocurrencies and bitcoin will always be my first love, but it is a small matter of time until they evolve or get replaced with something else. The weight of bitcoin's popularity is killing itself and it is no longer fun to use. The only option left is to let it sit until a solution arises or pay the fee and move onto something else.