Skip to content

Why is Bitcoin failing as a payment system?

From the day Satoshi Nakamoto wrote the white paper on Bitcoin, he envisioned it as a payment system and a fully operational currency. However, since its inception, many things have happened and the basic function of Bitcoin is far removed from this ideal

Many see and now use Bitcoin as a store of value, and this 39, has become the dream of an investor. its volatility is mainly projected upward, gaining a lot compared to any other asset.

But as a payment system, Bitcoin is still very imperfect, and there are fundamental problems that block its growth in that direction. The scalability of Bitcoin is hampered because it is too slow and expensive compared to more conventional payment processing platforms.

Cost of Transactions

Bank of the World Analysts America Merrill Lynch have weighed in on the debate about Bitcoin's role in the global financial system

Their first stop was Bitcoin transactions, which are fees charged by miners to validate a Blockchain transaction.

In the first quarter of 2017, fees were $ 2.40 per transaction – up significantly from $ 0.024 in the fourth quarter of 2016.

"One of the reasons for which there is a fee is that the larger the transaction data size, the more energy will be needed to validate the data. Bank of America Merrill Lynch analysts said:

"Fees are not strictly applied as transaction fees in normal banking, but if you do not include appropriate fees, there is a serious risk that a transaction will not be handled by a minor. "

The economic aspects of mining are complicated and necessary, but they play their part in slowing the adoption of Bitcoin as a payment system.

See also  Is the reign of Bitcoin as king of cryptocurrency in danger?

At the present time, the reward for each new block mined on the Blockchain is 12.5 Bitcoin. According to analysts, there are about 2,000 Bitcoin transactions in each block extracted, so based on this information, a base price of $ 37.50 ($ 75,000 / 2,000) per transaction can be derived.

Although they do not calculate accurate numbers, analysts said that reward factors for mineral exploration would likely be integrated with the actual economic cost of a Bitcoin transaction.

Speed ​​of Transactions

data, analysts also looked at transaction speeds. They found an average waiting time of about 10 minutes for the 300,000 transactions a day

They also compared this to the Visa payment system which processes an average of 2,000 transactions per second. , with a maximum capacity of 56,000 by

"Assuming that 20,000 retail transactions are processed every second, it would take about 100 minutes for the one-second transactions to be processed on the Bitcoin Blockchain. ", according to analysts.

Analysts estimate that standard transaction fees for transaction processors such as Visa and Mastercard range from 0.2% to 5%, according to analysts. on factors such as the size and location of the trader.

So, taking into account the $ 2.40 transaction fee of Bitcoin, plus the 0.20% charge. According to analysts, the minimum size of a transaction should be $ 1,200 for Bitcoin to break even.

In Conclusion

Merrill Lynch analysts therefore concluded that Bitcoin is a wonderful proof of concept for the underlying technology, which is the Blockchain

"However, until now, it seems to have not made much progress in its obvious agenda, to provide a purely peer-to-peer version of electronic money. "

See also  France will allow blockchain platforms for securities trading