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All of the above. First, let me start by saying that I love Bitcoin and I am optimistic about the long-term prospects of cryptocurrency as a whole. It has changed my life for the better, and I have met many people along the way who can say the same about it.

But I wanted to take a moment to "become real" about Bitcoin, especially after experiencing, first hand, the dramatic rise in value this year, and the # There is growing interest from the general public, many of whom rush to buy the piece despite not knowing what it's really like.

is bitcoin?

According to Satoshi itself, Bitcoin was designed to be a peer-to-peer electronic money that would send payments online between parties without a financial institution.

this by distributing transactions in an attached public register only. The records of these transactions are stored on blocks that are cryptographically linked to each previous block in a chain sequence. This work is done by miners who need the computing power to find the nonce variable that will produce the correct hash – called proof-of-work, which is an integral part of the consensus protocol.

Transactions take a lot of time

Although none of this makes sense to you, the integrity of Bitcoin's trustless system is based on a setting of difficulty that allows the cryptographic function to solve the problem. 10 minutes, regardless of the total computing power on the network. This dynamically adjusting difficulty setting was designed in the protocol to intentionally slow the transaction time, so it would be difficult for an attacker to gain an advantage when trying to resolve a chain of consecutive blocks and therefore to own the keys of the history. This does not take into account the waiting time in the mempool before a transaction is added in the next block – figure it out and you wait until seven o'clock for confirmation.

The point to remember is that transactions are not instantaneous. They take time.

Transactions Are Expensive

Bitcoin charges are measured by Satoshi per byte of transmitted data. As a Satoshi is a fraction of a Bitcoin, the price of the coin continues to increase, as does the relative price of the deal itself. To compound the problem, the wave of new interests has encumbered the network, causing transaction delays. To overcome this, shippers can prioritize the inclusion of their transaction in the next block by increasing the fees associated with their transaction. Increased competition further increases the market price per transaction. At the time of writing these lines, each transaction costs about $ 24.23 or almost the same price as a bank transfer

Now imagine a scenario where you are trying to buy a stick chewing gum at a gas station – do you wait 10 minutes or more and pay nearly $ 25 for treatment fees? Probably not. In fact, for the majority of your daily or even occasional shopping, Bitcoin does not seem a viable option against the methods you already use.

The competing systems are still better

The Bitcoin miners network can handle about 3.5 transactions per second (tps) on a block of 1 MB. Compare that with PayPal that processes easily 150 tps during peak periods or with Visa, which is 2,000 fps without waves and has a theoretical maximum of 56,000 tps, and you can see that competing systems can evolve much better. In order for Bitcoin to be a daily payment system, it must at least compete with existing systems and have the hope of evolving to higher peaks.

Centralized systems such as Visa and PayPal can constantly improve the infrastructure to increase the speed of transaction processing and throughput. However, the decentralized structure of Bitcoin means that it does not benefit from a uniform decision-making motivated by a business purpose. Despite its rapid growth and adoption, improvements to the protocol have been rare, failing to keep up with demand, and thus exacerbating the problems I've mentioned in previous sections of this article.

Other cryptocurrencies addressing the problems I've mentioned with Bitcoin. In the early days, Bitcoin relied on its brand's market dominance and was less cluttered by time and transaction costs. Today, it has attracted the attention of the cryptocurrency community and allowed other "altcoins" to interested buyers. Those who spend time looking for the technology behind the currency are well aware of the problems I've mentioned and could see greater merit in a competing currency. In fact, Bitcoin is rapidly losing market share on all other coins, accounting for only 36% of the cryptocurrency market, half only the year before.

What about future improvements?

There has been a lot of talk about off-line technologies that are supposed to solve these problems. Many still seem far from being implemented, have their own problems and still have to contend with a consensus and an education of users to be able to work

Then there is the argument of l & rsquo; Bitcoin protocol improvement. The community was very fragmented after the break-up of the New York Accord, which was supposed to help solve the lack of centralization of Bitcoin, by allowing different but important factions of the community to vote. In its current state, it is difficult to imagine the implementation of improvements in the short-term extensibility of the protocol to solve these problems

Bitcoin as digital gold

There is another side of the virtual coin In this discussion – that Bitcoin does not have to be a currency every day, but rather serve as a store of value in the representative form of digital gold. If this is the case, then higher transaction fees and long confirmation times reduce the incentive for participants to transfer money, which leads to more "hodling", theoretically reducing the amount of money spent. 39, offer and increase the price. Other currencies can then serve as a decentralized payment method to enable fast and low cost transactions. The concern with this is that by removing the value of Bitcoin's utility, larger fiat capital flows into more useful currencies could also encourage a reduction in the relevance of Bitcoin and thereby cause the bankruptcy of Bitcoin. ;opposite effect. In the end, Mr. Nakamoto's goal was to make Bitcoin a payment system, not a means of accumulating wealth. Only time will tell which argument prevails, but in its current form, Bitcoin is far from a currency every day.