Moneymaker, troublemaker
Predictions about Bitcoin’s future are usually summed up as follows: Bitcoin the coin will likely remain strong; Bitcoin the blockchain is cause for concern.
Even with sharp trading dips the coin commands respect on the 1 BTC to USD index.
A 20% decrease still puts it well over $80,000 – tens of thousands of dollars more than Ethereum, the world’s second-biggest cryptocurrency.
The Bitcoin price may fluctuate dramatically, but it still holds sway for millions of investors.
The blockchain, on the other hand, does not instil nearly as much confidence.
In an ultra-competitive space, its infrastructure frequently lags behind pretenders to the throne.
Decentralisation paradox
When Bitcoin first came to prominence, it was hailed for being a decentralised alternative to traditional finance that would benefit the public at large.
However, its colossal growth attracted massive mining farms that effectively cut individual players out of the equation.
These farms have since created mining pools – large groups of Bitcoin miners that come together to find solutions to blockchain problems.
There are only between 10 and 15 of these pools yet they control more than 90% of the hash rate – the rate at which Bitcoin generates hexadecimal numbers.
These numbers result when transactional data is sent through hashing algorithms on the system.
The effect of “excluding” individuals is that Bitcoin has, in fact, become far more centralised – exactly the opposite of what it set out to do.
Scaling lows and woes
Bitcoin may be a crypto juggernaut but from a scaling perspective, it is not even in the race.
It can only handle seven transactions per second compared to the thousands offered by competitors.
It is not that Bitcoin hasn’t tried to improve the situation.
The platform has sought help from third parties to turn things around, but the interventions have come nowhere close to what was expected.
The biggest example is Bitcoin’s partnership with the Lightning Network [https://lightning.network].
This separate blockchain was introduced in 2018 to work in conjunction with Bitcoin’s blockchain. Its intention is to allow users to transact in seconds, rather than up to an hour on the mainnet as frequently is the case.
One of the big hopes was that it would greatly reduce transaction fees since it would take pressure off Bitcoin’s clogged blockchain.
This never materialised; in fact, fees became even higher.
The other setback for Bitcoin was that the Lightning Network came with its own fees due to the cost involved in connecting it to the main blockchain.
Forking out any additional expense will inevitably result in users turning their noses up at the idea.
Righting the wrongs
It is no exaggeration to say that when somebody says “cryptocurrency” Bitcoin immediately comes to mind.
Such is the impact it has had on the world.
However, the best part of two decades after making its debut, it continues to face serious challenges.
Whether its reputation will remain intact in the future is anyone’s guess.
But perhaps that is where the solutions to its problems lie – remove the guesswork by successfully fixing them once and for all.
