Bitcoin politics plays too big a role in its scalability dispute, meanwhile, unconfirmed transactions queue and increasing fees scare investors away. It has become the most critical problem encountered by Bitcoin ever.
Despite having dragged over a long period of time, the block size and scaling problem of Bitcoin have never been as bad as is being experienced within the community presently.
Consequences of delayed confirmations
A lot of users have complained of transactions that remain unconfirmed for several days. With the current rate of Bitcoin volatility, what this implies is that the value of a given transaction may change drastically between the time of initiation and when it is eventually confirmed. A situation which makes it extremely difficult for the cryptocurrency to be used as a convenient medium for everyday transactions.
Transaction fees, on the other hand, keep rising exponentially, raising doubts among users about the original functionality and perceived advantage of Bitcoin over other means of payment and transfer of value.
Michael Vogel, CEO of Netcoins, describes this as a critical situation that may lead to an exodus of users from the Bitcoin community into other crypto ecosystems.
Vogel tells Cointelegraph:
“This issue with Bitcoin has now become critical. I've already had new customers ask me about the usefulness of Bitcoin, especially because they were initially drawn to it by its purported "fast and nearly-free" nature. It seems neither of these is the case at the moment, and it's frustrating them. Bitcoin's reputation is at stake, and the consequence is that other cryptocurrencies are drawing disenchanted Bitcoin users into their ecosystem.”
The number of unconfirmed transactions as at the time of writing stands at over 200,000, a figure that keeps growing by the second.
Ghanaian Bitcoin expert Nawaf Abdullah notes that the current problems faced by Bitcoin make it a very difficult idea to sell to new prospects who may be interested in the technology.
According to Abdullah, speed and the negligible cost of transaction used to be the key points that attracted new users to Bitcoin. That seems to be a thing of the past.
“Gone are the days when you could happily want to talk to and recommend Bitcoin to individuals and businesses for the sake of how fast, easy and cheap a transaction could be. Imagining yourself paying fees as high as $0.56 just for a $1 dollar transaction these days is scary. This means higher amounts definitely fetch higher fees (for those who want faster confirmations) and even that is not really as fast as it used to be.”
Abdullah blames this problem on the politics of interests playing out within the Bitcoin community making it look like there is no solution to the scaling problems. Like most users of Bitcoin who may not be directly involved in deciding what method is employed, Abdullah is of the opinion that whatever needs to be done to resolve this problem should and must be done to define the original purpose.
Abdullah notes that the Bitcoin community used to be with a single heart and purpose of interest. However, he observes that presently the power struggle has left the community very divided with every party feeling so right about the solutions it has, hence SegWit and Bitcoin Unlimited.
Until a consensus is reached and a solution adopted, this could continue to damage the whole Bitcoin concept and ideology. According to Abdullah, the implications of this situation for Bitcoin could be very severe especially for those involved in educating several others about the technology.
“Getting people to understand how easy, fast and cheap a Bitcoin transaction could be, which basically is a selling point to both businesses and individuals. We just won’t be happy for them to actually experience the opposite of what we inform them according to Satoshi’s dream. You can’t become your own bank and be costing yourself every penny saved.”
Apparently, Bitcoin has proven to the world the possibility of peer-to-peer transfer of value without the involvement of any central authorities or third parties.
This is the foundation of the new technologies and smart contracts we see today and also the reason why they will continue to do better should Bitcoin continue to fail.
Technologies like Ethereum and many others will continue to grow as better payment options, while the almighty Bitcoin remains just a safe haven to some. Something has to give!