Bitcoin’s utility has long been questioned by its cynics. They see the cryptocurrency as nothing more than a worthless digital currency, meant only for those on the fringe, namely criminals and staunch anti-establishment figures.
But, recent massive transactions made with the cryptocurrency have shown that Bitcoin has real-world utility, despite what the critics may be spouting.
Bitcoin Can Transact Millions for Dollars
On Monday, two wallets first unidentified by the cryptocurrency world initiated a jaw-dropping transaction. One sent the other some 112,027 BTC — around 0.5% of all the cryptocurrency currently in circulation — which is currently valued at $933 million.
As pointed out by Nejc Kodrič, the chief executive of Bitstamp who seemingly laid claim to the transactions, the transfer cost a mere $3.89 — around the cost of a cup of coffee at Starbucks.
— Nejc Kodrič (@nejc_kodric) October 14, 2019
This comes shortly after two accounts participated in a $1 billion transaction that some thought was tied to Bakkt. At the time, Yassine Elmandjra, the crypto-asset analyst at ARK Invest, wrote on Twitter, that “[this is a] beautiful display of Bitcoin as a trust-minimized global settlement system.”
While it is hard to find data on what transactions like the aforementioned would cost with traditional financial services, it likely would cost dozens of manhours of paperwork, intermediation through the Federal Reserve and other central banks, a fee taken at many steps, and a potential delay if it took place over the weekends.
It is important to point out that Bitcoin’s benefits also appear on a smaller scale. This writer recently received an international $2,000 wire transfer from an employer, which cost this writer $20 to receive after a two-week wait. The same transaction with Bitcoin would’ve cost less than $0.50 and taken no more than two hours.
Not Ready to Become a Currency Yet
Although the abovementioned transactions clearly accentuate that Bitcoin makes sense, the cryptocurrency is not ready to become a widely-adopted currency or form of money just yet. And that’s a statement made by some of the project’s most prominent supporters.
As reported by Blockonomi previously, Jack Dorsey, who is the CEO of both Twitter and Square — two companies that have a relatively large cryptocurrency demographic — argued that Bitcoin isn’t ready for mass adoption. He stated that it isn’t “functional as a currency”, seemingly making reference to the base layer processing speed of seven transactions per second, which pales in comparison to the (centralized) PayPal, Visa, and so on. Dorsey added:
“The peaks and troughs are like an investment asset and are equivalent to gold. What we need to do is make it more usable and accessible as a currency, but it’s not there yet.”
Dorsey’s comment has been backed up by Samson Mow of Blockstream. Mow stated that seeing that at the base layer, Bitcoin takes an average of 10 minutes to process transactions, sometimes upwards of three hours, it isn’t ready to be used in the context of global currency. “You don’t design a payment system that takes 10 minutes to settle on average,” Mow quipped.
Enter Lightning Network
Sure, these comments may be harrowing on their own if taken out of context, but there are solutions on their way that may bring Bitcoin payments to the mainstream.
The most prominent of these solutions is the Lightning Network, a second-layer scaling solution that migrates some of the transaction load off the main Bitcoin chain onto a separate layer/level. Transactions made with the solution are effectively instant (hence “Lightning”), more private than their on-chain counterparts, cost less than a cent, among other benefits.
Currently, the Lightning Network is being developed by key industry stakeholders, only facilitating a small portion of the value processed by Bitcoin. However, analysts believe that within the next one to two years, there will be Lightning solutions that will allow consumers to realize the benefits of Bitcoin.