As the bitcoin price is promising to end 2017 on a high note, high transactions fess continue to plague bitcoin users.
It’s almost impossible to think that the current transaction fee to send a single bitcoin currently amounts to the cryptocurrency 2013 value of $20. While bitcoin enjoyed unprecedented and meteoric price increases this year, bitcoin enthusiasts are becoming more dismayed with its popularity and subsequent congested network as everyone wants to get in on the Bitcoin gold rush. The rapid growth has been bittersweet as bitcoin believers have finally vindicated the naysayers, but the network hasn’t evolved quickly enough to keep up with its growth.
In future historical records, 2017 is likely to stand out as a turning point for bitcoin. Very few bitcoin advocates could have predicted that the cryptocurrency would reach $20,000 at the close of the year in January 2017. However, the growth also brought its share of obstacles, most notably the rising transaction fees. Currently, a single transaction starts at $20, a great indicator that the network needs to find a solution for its increasing issues caused by its growing popularity.
While it’s not clear whether Satoshi intended bitcoin to serve as a P2P for micropayments, what is clear is that bitcoin is becoming quickly stripped of its utility thanks to exorbitant transaction fees and slow transaction times. Users across the internet have been complaining about high fees and undependable transaction times, while bitcoin advocates and developers are slow to act on finding a solution.
One particularly angry Reddit users questioned the great Satoshi’s wisdom as bitcoin is basically useless when it comes to payments less than hundreds of dollars. The user noted that when sending a friend $5, they have to pay a $15 transaction fee. Something which is wildly impractical and seemingly counter-intuitive considering the philosophy behind the decentralized cryptocurrency.
Users responded by advising the enraged Redditor to either change their wallet settings, be patient for networks to be fully functional which promises to address the issue such as Lightning network or to simply accept their fate.
While these are likely the user’s options, being told to simply wait is a hollow reassurance when an urgent $5 becomes an unnecessary $20.
Every bitcoin user has a price for which they are willing to part with their bitcoin, not only when it comes to selling, but also when it comes to simple transaction fees. While coughing up an extra $20 when you’re transferring millions of dollars’ worth of bitcoin seems reasonable, but for micropayments of $100 and under seems ludicrous. Bitcoin has been unconducive to micropayments for quite some time now but is quickly becoming a hostile environment even for mid-sized payments of $2,000 and under.
Which begs the question whether bitcoin is doomed to simply act as a digital asset because no one can afford to utilize the cryptocurrency in everyday life?
A large portion of new bitcoin investors is of the middle-class, not the ultra-wealthy. These people likely put $50 a week or a month aside to gradually invest more in the cryptocurrency. Crypto newbies are often told to store their holdings in a wallet where only they have access to their private key. However, with current transaction fees, new investors will not be able to move their cryptocurrency from an exchange to their wallets, simply because they cannot afford the transaction fee.
If we compared cryptocurrencies to energy resource, bitcoin could be compared to coal. It’s expensive to transport and useless in small amounts. Unless an investor is willing to invest a significant amount at a time, it’s impractical and loses its utility and potency. Several of bitcoin’s counterparts are more practical and easier to come by such as ethereum or bitcoin cash.
Despite the growing elitism of bitcoin, it is the cryptocurrency which promises the most stability and longevity. Considering bitcoin’s growing value, popularity, and market dominance it’s less vulnerable to possible destruction. However, the scaling issues have to be addressed. Whether Lightning Network will prove to be the much-longed-for solutions, this remains open to hopeful speculation. Until such time when bitcoin finds a solution, the cryptocurrency will essentially remain useless when it comes to utility and be doomed to remain as a purely abstract digital asset.