How towering fees is changing the scenario for Bitcoin ?
Dec 23, 2017 Posted / 1951 Views
Whenever any Bitcoiner was asked to speak about the biggest selling point for Bitcoin, he/she always replied- speed, convenience and affordability. Even when Satoshi Nakamoto, founder of the Bitcoin, wrote about the digital currency in the Whitepaper he mentioned that the fee charged by the mediating parties increases the overall transaction charges, restraining the minimum realistic transaction volume and dispersing the prospect for lower regular transaction charges.
Anyone can well imagine that in the initial years, Bitcoin price ranged something in between $0.10 to $1. Bitcoin supporters stood by its side throughout its journey and they often remark that the charges paid for the bitcoin network were frequently a lot less than the cost paid by merchants to accept credit card payments. However, in the recent months, bitcoin's prominence has far surpassed the network's aptitude to handle the growing demand.
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Bitcoin network in present era is a completely different from what it was before. Currently, fees are very high, and even the standard transactions costs around $28. This apparently throwing connotations on the ways bitcoin is being employed and the types of business developed on top of it. Certainly, the companies which are working to implement Nakamoto's dream of bitcoin as a platform for "Everyday casual transactions" are beginning to differ from the network and parting its ways to the alternative networks. Clearly, it's not feasible to hold up on small transactions when each transaction will amount to $20 additional charges.
Many exchanges and trading platform were founded on the idea to make Bitcoin payments easily acceptable for ordinary businesses. These platforms accept payments on merchants’ behalf and present the alternative to instantly exchange the payments to dollars or other traditional currencies, securing merchants from bitcoin's fluctuations. In the previous years, these platforms may well accept payments in just few pennies.
The charges for the Bitcoin network had gone higher mostly in the last few years. Therefore most of the trading platforms are obliged to inflate transaction charges in response and have announced that they would start charging higher to the customers as they themselves are bearing the burden of hefty fees.
Many trading platforms also received complaints about sluggish payment periods owing to the heavily congested network. The mechanism, which the Bitcoin network utilizes to deal with congestion, is essentially auctioning the capacity to the uppermost bid. After this, the clientele will have the alternative to pay a more fee in swap for prompt delivery or to pay a lesser charges and wait till the congestion lowers down to create enough room for minimal-fee transactions. With the rise in the fees, this proposal is becoming more and more unpredictable.
Also rising fees are pushing companies away from bitcoin, as the trading platforms have recently announced to begin forfeiting payments with the competitor and little brother of bitcoin- Bitcoin Cash. The charges on the Bitcoin Cash network average around 25¢, a stark contrast to $20 on the mainstream Bitcoin. This option will give merchants to an authority to decide whether to accept payments with bitcoin, Bitcoin Cash, or both.
Interestingly, video game giant Steam publicized in the beginning of December that it would stop allowing bitcoin payments, quoting skyrocketing transaction fees as the reason behind the decision. Even the gift card merchant BitCart swapped from bitcoin to its competitor Dash in June. Further commonly referenced application of bitcoin is transfer of funds. Numerous companies around the world are working to build global money transfer services based on bitcoin that can actually give tough competition to traditional payment networks like Western Union and Moneygram.
In the long term switching to a rival currencies like Bitcoin Cash or Dash might mean taking away support from Bitcoin all together until things stabilize. Or it may also mean merely transiting increasing costs on to customers.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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