The fees is high and the transactions are slow. It’s all very frustrating!
The high fees and slow transactions? Yeah, they’re connected. You have probably noticed it by now. There is no reversing back unless someone comes up with a solid solution. It’s getting super unstable. But, Bitcoin price is still increasing. What the fudge is going on??
A Scarce Resource
Unfortunately, only 1MB of data allowed per Bitcoin block. In simpler terms, only 1MB of data is allowed every 10 minutes. What a freaking drag!
But, why is it so?
The transaction capacity is scare for a reason. There was limit that was placed into the code. It has been put their intentionally by the Bitcoin developers. Theoretically if there is no artificial limit the chances of scarcity for transaction space isn’t guaranteed. It would then be entirely market driven (willingness of the miners to mine more bigger blocks.)
Insanity At Its Peak
The artificial constraint of 1MB simply means that Bitcoin users are in competition with each other and its a war!
The Bitcoin network can only handle 12.21 transactions per second (according to Blockchain.info) and that’s really freaking slow. The Bitcoin miners who use hardware to do all the complex mathematical problem solving to generate new Bitcoins.) Everything lies in their hands. It’s completely up to them to choose which transaction they want to process first. They obviously end up using the one’s with the high fees which makes Bitcoin an unreasonable way of paying small amounts.
Imagine you have to take the city bus. But, it has only 12 seats and comes along every 10 minutes. The seat are taken by the highest bidders. Also, if you’re not willing to pay for than the rest of the 800 people waiting to get one of the 12 seats. Too bad! You might get lucky if you are willing to wait. But, you’ll still have to pay a lot.
Isn’t it awful?
A Lot of Activity
Apparently there is a lot of on-going activity related to non-bandwidth scaling mechanisms. Simply put, it means that the transactions will be moved from the main blockchain to other systems like lightning networks or side-chains.
It’s not exactly like moving things okay? You can call its layer 2 solutions! Something like transforming Bitcoin into a settlement layer. It’s all the same! The idea behind it is that one these second layer systems are up and functioning. The capacity will be tremendous!
The transactions? Well, they’ll be faster than even and fees will be low too. That’s what the plan is at least.
A Settlement or P2P?
The seminal whitepaper defined Bitcoin as “A Peer-to-Peer Electronic Cash System”. It does not say “An Electronic Settlement Network”. The Bitcoin road map has completely taken a new direction. Many people won’t be huge fans of this plan.
Bitcoin is becoming more of an institution to institution form of money, rather than what it was actually built for. P2P! Pretty sure, no one wants that!
P.S don’t expect the Bitcoin fees to improve any time soon. It’s in their nature to be high!