Bitcoin had been created with the concept of “digital cash” in mind.
When it was introduced, it had painted a picture of a world where a non-cash method could be used for day to day transactions performed by everyday users, ranging from micropayments to retail trades.
That very concept fueled the popularity of Bitcoin and led towards the emergence of other cryptocurrencies.
However, while those other cryptocurrencies somewhat fit the bill of “digital cash” with their nominal transaction costs and understandable transaction times, Bitcoin fell far behind due to the scaling issues that it faced with its transaction pool, and that resulted in “micropayment” transactions to be charged at an average of $20 in terms of processing fee.
Add the transaction times on top of that and you have a recipe for not using Bitcoin for “usual” transactions, such as paying for your coffee or gas, or for buying groceries for that matter.
To be fair, other cryptocurrencies have not seen as wide a user adaptation that would warrant these transactions on everyday stores, but they do boast the potential to do so in the future with their economical transaction costs and fast transaction timings.
Digital Cash or Digital Gold?
With the sky high prices of Bitcoin that are now coupled with high transaction times and costs as well, many people in the cryptocurrency community now wonder if Bitcoin has evolved past its initial objective of digital cash and instead of a digital currency has turned into a digital commodity for investment and safekeeping, like the more conventional “gold” in everyday world.
But that rebranding does not sit well with some cryptocurrency enthusiasts, who think that no matter its high value, Bitcoin needs to be usable as a cryptocurrency and serve its true purpose to stay relevant to the financial market.
Does anyone even use bitcoin for payments anymore?
As it turns out, the recent cryptocurrency fever that took the world by storm also created a niche market for cryptocurrency regarding large payments such as that of real estate transactions.
However, the volatility issues that are faced by Bitcoin sometimes hinder these transactions as well, because if someone is to accept $1 million in Bitcoin one day, it could become $800,000 the next day or go over $1.2 million for that matter. These unpredictable fluctuation mechanisms make it harder for Bitcoin to be used as a “real” alternative of cryptocurrency.
One of the most popular solutions to help resolve Bitcoin’s scalability problems and in turn resolve its transaction issues is the Lightning Network.
The Lightning Network upgrade, which was recently deployed for testing, will work with using off-blockchain, pre-funded payment channels that will take the load off of the main network and use pre-funded amounts to process transactions faster.
While still in the testing phase, the Lightning Network upgrade, if it works, will be resolving the transaction issues significantly.
However, this would still leave the volatility problem to exist, and that is something that can only be resolved with time.
Bitcoin, being the first and most popular cryptocurrency in the world, has the potential to move beyond its intended labels of digital cash and digital gold by being a hybrid or an even evolved model of these concepts that does not only hold a high value but also has understandable transaction processing times and fees.
That would take some patience and time across the board and the community is ready to do that. However, how new cryptocurrencies appear every day while promising so much more than Bitcoin’s functionalities, is something that points a question towards Bitcoin’s future.