Shortly after day one of Bitcoin’s launch it was already obvious that it was not suited to be a global currency. The fact that transactions were and still are not secure until you have waited for several confirmations — the standard being 6 — means that you need to wait around an hour to verify that a transaction is valid. It goes without saying that you aren’t going to stand in a coffee shop for 60 minutes waiting for your coffee payment to be approved.
Why can’t the barista just hand over the coffee as soon as the transaction is sent and visible in the Bitcoin mempool? Because the transaction can be voided weeks after the payment is sent. If the transaction is sent with a small enough fee, it will sit in the mempool for two weeks before it’s returned to the sender to free up resources. Do you think Joe is going to go out of his way to re-send that payment to the coffee shop, if he even notices it was returned to him?
That’s not the only way to exploit the system. Perhaps Joe is attempting to perform a “double spend” on the Bitcoin he owns, so that the merchant sees the transaction as valid, but it later disappears as it is rejected by the network. This is extremely easy to do, there’s even an app for it. These weaknesses are not fixable without a radical redesign of the entire Bitcoin model.
Not only is it slow, it’s also expensive to use. The average transaction fee is around 22 US dollars at the time of writing, and during Bitcoin’s all time high fees were around 50 US dollars. Now that we’re heading into another cycle of increased adoption, fees are expected to climb even higher than 2017’s all time high. There’s not much point using Bitcoin to buy your coffee if the fee costs more than the coffee does.Perhaps it’s only good for big purchases?
Okay, so Bitcoin’s no good for coffees. What about big purchases then, like cars and houses? Sure. But at this point, what are you really getting...