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Bitcoin Transaction Fees Unsustainable for Small Payments

Bitcoin Transaction Fees Unsustainable for Small Payments

The current crowing of the main Bitcoin Network is having knock-on effects. The high transaction fees of Bitcoin, sometimes with a fee of 5 US Dollars not confirming for over 24 hours, this is a sign that the network is struggling to handle the load of transactions.

If Bitcoin is to be used on a wider scale, where a single town doing its daily payments could grind the network to a halt even with segwit, and the requirement for block sizes of several gigabytes to work on a global scale, this is where the potential for networks like the lightning network came in. There are many in the Bitcoin community who do not wish for this, for they wish Bitcoin to be as it is, but this is simply not sustainable for daily use, whereas it may be suitable as a form of digital gold/wealth store.

This is now creating problems for those who transact with clients and workers in Bitcoin globally, as the high fees are increasing costs, when using alternative Fiat services such as PayPal or alternative currencies such as Litecoin, Ethereum, or NEM is now working out cheaper and more effective for smaller transactions. Litecoin would have the same fundamental problem as Bitcoin under load of everyone using it in day-to-day, ethereum also seems to have this potential. Bigger blocks are not simply the solution, as this will result in a centralization of nodes, which is being seen already. Imagine relaying blocks of several gigabytes? Plus having to store them on disk space. The largest commercial hard drives being 60 terabytes or thereabouts, they would be filled very quickly. NEM seems to have been built to scale with the intention of larger quantities of payments, with its consensus algorithm being POI.

The high transaction fees and slow confirmations will, until there is a solution or using an alternative digital currency, will prevent the use of cryptocurrency to merely buy your coffee in the morning, not to mention the price volatility.  The next year is going to be interesting for developments in the cryptocurrency space, although Bitcoin now has some serious contenders, which have bought something new to the table.