These are the key issues besetting the Bitcoin platform today:
So slow that it cannot be a payment method for say, retail or ecommerce transactions. It is however, a good and secure store of value, despite the recent slides in it's price.
Here are some indicative transaction speeds across a variety of payment platforms:
a. Bitcoin - 3 to 7 transactions per second
b. Ethereum - 20 transactions per second
c. Paypal - 193 transactions per second
d. Visa - 1,667 transactions per second
The demand is so high and the supply is so low that the costs of generating bitcoins is ridiculously high. As of last week, the cost to process an average payment in the next block with a confirmation delay of about 10 minutes was USD 14. This high fee makes teh confirmation of small transactions impractical since it is a standard fee whether the transaction value is USD 10 or USD 100,000.
Efforts to make bitcoin more useful - investors tend to hodl them - rather than use them as a payment means
Two bitcoin engineers, Joseph Poon and Thaddeus Dryja, may have built the solution to overcome many of the issues listed above. Their invention, The Lightning Network, is a layer of code that can be grafted on the bitcoin blockchain to support far more transactions that can be executed almost instantaneously, reliably and cheaply. Their whitepaper has been described as the second most important - after Satoshi Nakamoto's published in 2008.
In recent tests that were completed, Alex Bosworth, who setup a demo blogging site, Y'alls, where developers could purchase articles with bitcoin, he commented as follows: “Speed: Instant. Fee: Zero. Future: Almost Here.”
In the wake of this success, Blockstream has setup an online store selling T-shirts and stickers that only accepts payments with Lightning.
Today, more than 200,000 computers on the P2P network strain to process the growing number of bitcoin transactions. There is an acute need to solve the issues around the Bitcoin platform before users ditch this revolutionary technology.
The Lighting Network seems to have the solutions needed today to fix Bitcoin by moving the bulk of transactions to private channels between transaction parties and using the baseline blockchain ledger to ensure valid transactions that overcome the 'Double Spend' issue.
To dive into greater details how the network overcomes the current Bitcoin network issues, check out Lightning Network's site.
Image Credit: Photo by Johannes Plenio on Unsplash
