Intro:
Before we go into SLOG 3, I wanted to share some info I came across about Bitcoin growth, so I'm going to add a SLOG 2.1 for that.
Sources of information
I found Quandl to be a good source of information about Bitcoin.
As described on their site: "Quandl provides several measures of the size and value of the Bitcoin market, including the total number of Bitcoins in circulation, the market capitalization of Bitcoin, and the number of unique Bitcoin addresses in use."
Total number of Bitcoin
You can see that the total number of bitcoin is still growing, but slowing down, at a current 16,396,837.
Market Capitalization
Even thought the amount has slowed down, the price has gone up.
Number of Unique Bitcoin Addresses used per day
Although the number of BTC has slowed down, the number of Unique Bitcoin addresses (accounts) is steadily increasing. Which indicates more demand for the currency.
Time taken per transaction is increasing
The network is getting slower, it's taking more time to process the transactions
So the number of BTC available is growing more slowly than before (less supply), but there is an increased amount of accounts and activity around the currency (more demand). It seems to make sense that the price will increase as a consequence of this.
However, the transaction time is getting slower, which may pave the way for other currencies to provide a better service compared to this, so drive more competition and slow the growth and value.
Why is the transaction time increasing
This has been explained in detail here. It is related to the block size limit which was originally set at 1MB.
But there are some actions being taken (Segwit) to improve this speed, which are explained here. "SegWit is set to activate as soon as 95 percent of the network measured in hash power signals support for it." however "currently, the level of support is hovering at around 32 to 33,8 percent and it has never been above that. The level of support is so low because there is a large block of users opposing the update on various bases."
So it does not seem very clear what will happen with this yet.
The fee per transaction is increasing
Lastly, I've observed that the transaction fees are increasing as well, it is currently at about $24 USD. This is the average revenue per transaction made by miners.
This makes this network setup unreasonable for small transaction prices. For example, assuming that you are not willing to spend more than 5% fees on your transactions, the smallest transaction that you'd be comfortable trading on this network would have to be at least 1/5% = 20x the current fee. This means that at $24 USD fee, you'd have to trade at least $480 USD for this to make sense. As another example, let's say you'd like a 1% fee, then it's 100x, so the minimum transaction would be $2400 USD, which at current prices is a bit less than 1 BTC.
CONCLUSIONS
Bitcoin volume is still increasing but slowing down (increased, but slower supply). Bitcoin price has increased exponentially, with the number of accounts increasing steadily (more demand). There seem to be problems in the transaction speed, which may lead to alternatives becoming available and the solutions don't seem to have been decided yet. Lastly, transaction fees are at a price which make small transaction prices not feasible, which could also lead to platforms that can process small transactions at lower fees to take market share for different use cases.
Not sure what to expect from all of this. But it seems that for the time being Bitcoin seems to be a currency that is becoming more scarce, but still on high demand. Perhaps because it is a gateway to buy other currencies, or perhaps because it has become the standard currency to store value compared to other currencies (the digital equivalent of Gold). It is still unclear to me which are the key drivers behind this and what will happen next.
NEXT SLOG: SLOG 3
If something else comes up regarding this topic I will add it as a SLOG 2.x. If nothing else comes up regarding this topic I'll move on to SLOG 3: how to buy Currencies and Assets.
THOUGHTS
I hope you enjoyed this SLOG and found the information useful.
Please leave your thoughts about this topic in the comments section below. Remember I'm still learning about this ecosystem, so if you think something is incorrect, or you would like to add something, please do.
COLLABORATE
If you'd like me to research a specific topic, please leave your comments in the comment section below.