The tx rate is absolutely a problem for BTC's store of value proposition

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Avatar for ErdoganTalk
3 years ago

... even with large actors replacing the normal users

Bitcoin (BTC) has a transaction rate of about 15000/h or about 4 tx/s. It is the max transaction rate, and it is exhausted with the current usage, and has been for four years, leading to the queues, recently 200000 tx waiting in the queue called the mempool.

The rate is artificially capped there, and the mechanism to do it is the blocksize of about 1.7 MiB (obviously also the block rate which is 6/h, but nobody wants to change that).

Bitcoin Cash (BCH) has no constraints, only the laws of nature, and temporarily also the limits of hardware and software. Our tx rate is 19 times higher currently, or 77 tx/s, with plans, people and resources to increase it, the work is ongoing. No consensus change is needed (low risk of split), but most of the node implementations need to synchronize the changes in the chat protocol to make it happen. (The nodes communicate with each other using the chat protocol)

The queues lead to users bidding up the tx fee to come to the top of the queue, with transactions often costing 2-5 USD (median) over extended periods lately. With expected inflow of users, which can take the coin price to 100kUSD or even 500kUSD, even the hedgefunds can be discouraged by the fees, except the very largest. The fee amount doesn't matter, the fee is a way to select those who want to fit into the tx rate limit, from those who think it is too expensive.

There are 3000 hedge funds in USA alone, and many more institutions to keep an amount of money for their owners.

Normal users will be pushed out, and sometimes without the opportunity to sell all of their value (depending on the size of the tx outputs or coins they own).

Increased requirements for hardware; storage, computing power and network, will keep some actors out of mining, but there will be plenty. There is not only the Google search engine, not only the Facebook social medium, not only the Amazon internet vendor. But to our advantage, the market for mining is one of the freest imaginable, with little government intervention (some taxes, some intrusion in the power price, some bullying) The internet giants referred to, can in fact take advantage of government intrusion in the form of antitrust laws or competition laws or anti-monopoly laws (properly misnomed to give the impression of giving increased competition, while the opposite is true). The near free market in bitcoin mining means that there will be many miners, and many more potential miners.

New users have to come in to take the coin price to 100k as everyone including me expects. Do you think they will be happy with only imagining they have the coins, or take part in a contract for difference, or some custodial scheme? I think not, that would be a herculean task of opinion management, after talking up the not your keys, not your coins meme, the decentralization meme, the freedom meme and store of value meme for years.

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Avatar for ErdoganTalk
3 years ago

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I changed my view lately, I started to see BTC and BCH complementary coins and not in competition. Maybe I'll explain my point of view in a new article.

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3 years ago

Ok good

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3 years ago

this is my humble (and very simple) opinion

https://read.cash/@bittantis/btc-vs-bch-a-necessary-war-ca352dac

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3 years ago

Like this

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3 years ago