It happened. As foretold, the deadly mixture of high transaction volume combined with maintaining a block size limit of one megabyte has brought Bitcoin transactions to a slow, molasses-like crawl.
To be fair, annoyance and hyperbole aside, this does not necessarily spell doom for cryptocurrency’s glorious flagship. Bitcoin still works. Transactions still get through. It still remains a cheap peer-to-peer payment system unrivaled in privacy and independence among traditional world currencies. Still, there’s no avoiding the uncomfortable truth that one of its key advantages, its transaction speed, is gone. Make no mistake, Bitcoin’s reign as the lord of fast, efficient transactions is at least temporarily over.
No need to panic, however. With every crisis comes opportunity, and Bitcoin’s case is no different. The current challenges facing the crypto-economy will lead to solutions, and from the hard lessons forced upon the developer community will come strength and innovative developments in how to deal with future growing pains. Yes, there will still be negative effects caused by slow transaction confirmations, but those will likely be in adoption by the general public.
Good for crypto
The beauty of a decentralized free market is that no single point of failure can bring down the whole system. While Bitcoin’s price, market cap, and transaction volume have largely stagnated this year, nearly every one of the top ten alternative cryptocurrencies has grown across all three metrics, with Ethereum making particularly impressive gains. Even Bitcoin itself has benefited from its own block size woes with a spike in nodes and blocks mined featuring a doubled block size limit, pushing the problem closer to resolution. The long-run state of crypto is stronger as a result of this momentary setback for Bitcoin.
Bad for adoption
Unfortunately, while Bitcoin’s turbulence leads to improvements in the insular world of cryptocurrency, regular businesses tend to be more faint of heart. Common objections to accepting Bitcoin include price fluctuations and lack of adoption both by their competition and by potential customers, while its most attractive feature tends to be the promise of instant, nearly free transactions. It is very unlikely that businesses would switch to alternative cryptocurrencies with extremely low rates of adoption and, in some cases, even less stable price structures than Bitcoin, meaning if crypto’s frontrunner loses acceptance on Main Street, so does the rest of the pack. Finally, with its top advantage gone for the time being, Bitcoin’s time is running out to fix its problems before businesses end the experiment and go back to traditional payment methods.
Bitcoin’s confirmation delays, while a temporary headache for its users, is good for the cryptocurrency world at large, and will lead to solving long-term issues. Adoption by business, however, is a much less forgiving prospect. All personal growth stemming from its challenges aside, Bitcoin had better get to solving its problems before too many businesses catch on and become skittish.
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