Bitcoin's abusive fees.
Most of us that think of Bitcoin as a currency are having a hard time facing all the fees and transaction times.
If, like us at Primus Investing, you are using Bitcoin to pay utility bills - you're facing transaction fees of around $12 USD per transaction and waiting quite some time for them to be completed.
But consider the following:
Do you want your Bitcoin to go up 500%?
If Bitcoin was working as a currency and we could transact around the world cheaply, it would not have the explosive price growth it has currently. It would be adopted everywhere, and would stabilize - thus not being a speculative asset!
You are getting great returns because of how early you have adopted the technology. Because you are in early, you will have to deal with growing pains, and transaction fees are one of them.
If you invested in Apple now, your returns would not be so massive. Why? They are already a market leader; the investment is incredibly safe. If you invested in them when Steve Jobs was running around trying to get stuff done, you would have made a killing.
That’s because they didn’t have the best technology yet, or the adoption they have now.
Average transaction size on-chain is around $15,000
Getting your transaction into a block can be thought of as an auction-like process.
Whoever pays the most will get their transaction confirmed faster, which is a fair process.
The currency average transaction size on-chain is around $15,000 so a $20 fee for that transaction size would represent just over a 10th of 1%, which means you get less priority when dealing with smaller amounts!
Is Lightning network the solution?
It could be, but we don’t really know that yet. It’s one of the proposed solutions that appears very promising.
If Lightning is not the answer for whatever reason, something else will be. Bitcoin is far too valuable to not figure scaling out. It might be a longer road, but there are some steps we can take in the meantime to lower our transaction fees.
But Coinbase has not implemented SegWit!
We have a scaling solution that will make transactions cost less, and it’s called SegWit. There is one serious flaw with it: if you don’t use SegWit, you can’t get the benefits of SegWit.
Pressuring Coinbase to add SegWit might be a way to help drive adoption.
If the largest exchange won’t implement a scaling solution that exists, then we can’t expect that scaling solution to positively affect the network. SegWit adoption is currently below 10%.
This is a big reason why transactions are more expensive.
Won’t Bitcoin lose all it’s value if we don’t make it completely scalable immediately?
We believe this is pure speculation, but it doesn't need to be scalable immediately.
Unless fiat currencies or other altcoins are able to solve all of the problems Bitcoin intends to fix in the meantime, Bitcoin will pull through in due time.
Bitcoin is more than asset or a currency. It is a technology.
And technology takes time, and if it was perfect Bitcoin would already be at $1M per coin. Building something right is more important than building it fast. A strong foundation is the most important thing for Bitcoin right now.
Here is one example of shoddy code harming a network:
DAO – Ethereum allows developers to build dApps on their platform - DAO was one of those apps.
Long story short, The DAO was hacked and Ether was stolen.
Ethereum had to be hard-forked to return the stolen Ether to the DAO, so it could be returned to users.
This was not a vulnerability with Ethereum per se, but one created by a solution running on the Ethereum network.
If Bitcoin was entrusted to poor development like the DAO, something equally as negative could happen.
It’s important that we build slowly to make sure that security is being taken as seriously as possible. Nobody wants to lose their Bitcoin.
So, bottom line is: Are fees really that abusive when you think of all the information we stated?
We believe not, although using Bitcoin for small and micro transactions might be a bit of a problem while Bitcoin isn't fully matured and in use.
That's all for today, but we'll be coming back with more, so stay tuned.
Tipping jar - help us overcome the transaction fees!
ETH: 0xEE9FFe7912704C43F0375C60b202a86c0A9e02C7
STEEM: STM8k1rqZWQhiZWvR7QXgRPAGYw6NyrvrQ5uJwDsYKo4NXxvuuKebw
BTC: 13PAD9NX8oVX3Sn1QyU6MHNTLF7C4gdTVR
Still rather pay fees than tax, just saying 😝
We don't mind paying tax on gains, as long as it is fair and square and not such a theft.
We have been reading that in the US people will be required to pay taxes per transaction made - that will eventually make people less prone to invest into cryptocurrencies.
Not so good if the rest of the world adopts 50% taxes on cryptocurrency transactions.
A poorly functioning tech might not be a superb investment
While there might be better cryptocurrencies associated with bleeding edge technology , we still see Bitcoin as the father of this new world and it should be given its due attention - even though we may see other cryptos de-throne it.