Following my chart analysis predicting the recent bitcoin crash, which is also dragging all the cryptocurrencies with it by the way, I decided to write more to explain why bitcoin is destined to fail. This topic isn't really new, many have already wrote about that, but I thought I would summarize things for my fellow steemians.
To answer that, I would like to start with a personal anecdote. Last month, I went to shop online at Newegg, I was glad to see that they started accepting bitcoin, so I figured I'd give it a try and buy something with it. So I find this nice sale and I place my order. However, the bitcoin confirmation wouldn't come, and 24h later, from the merchant's perspective, the transaction wasn't paid, even though it was clearly submitted to the bitcoin blockchain. So the merchant automatically cancels the order! I was extremely aggravated by that, and it took 4 DAYS to get the final confirmation. Luckily, I wrote them and got a prompt refund, but the point is, I missed the sale because Mr Bitcoin decided to delay my transaction.
Here's the twist. After I submitted the Newegg transaction, I have other transactions made from my wallet, and guess what, because of the stalled confirmation, my other transaction stalled too!!! So here I had 5 transactions waiting to confirm... 4 days later.
I'm sure I'm not the only one who has experienced that inconvenience. Since that day, I totally changed my view about bitcoin and realized that it's NOT a practical currency anymore.
Bitcoin was designed as an experiment, it was the first decentralized cryptocurrency to come into existence after the 2008 financial crisis, and its whole aim was to grant the people freedom from the banks. And so it did. However, nobody could have anticipated the scale of its popularity, and with time, the more people got into it, the slower it got.
As miners increased, the mining process became exponentially more difficult, and to guarantee that the transactions get confirmed fast, the users had to pay more fees to the miners, so they could give their transaction a higher priority on the blockchain. Bitcoin fees used to be 0.0001btc, and not it's 0.0005btc (minimum) if you want faster confirmations.
Going back to the miners issue, we realize that to mine in a profitable manner, more CPU power was needed, because by design, the math solving problem of mining increases its difficulty as we approach the maximum minable bitcoins of 21 million. So mining farms started to emerge, in China.
This is what a mining farm looks like, thousands of buzzing fans blowing on those cpu's too keep them cool while they crunch those numbers!
That's only one chinese mine. Consider there's over 1 billion chinese living on the planet, and you'll get an idea of the multiplying factor for such mines. Besides, China is the #1 electronics manufacturer of electronics, so it's super cheap for them to build such massive rigs, and draw millions of monthly profit$.
And let's not forget about those ASIC hardware miners that are extremely more efficient at mining than CPU's or GPU's. Unfortunately, such devices are very expensive and are becoming less available. Talk about monopolization!
Recently I got an email from Kraken:
Please note the following changes to our bitcoin (XBT) and tether (USDT) withdrawal fees, and the Gnosis token (GNO) address fee. Bitcoin (XBT) withdrawal fee now 0.0025 XBT
That's a whopping 5x increase! from the previous 0.0005 XBT.
And the next day:
Bitcoin withdrawals now batched to reduce cost. Many clients have said they prefer a lower bitcoin withdrawal fee even if it means slower transactions. Accordingly, we are now sending withdrawals together in batches to reduce cost. This allows us to reduce the bitcoin withdrawal fee to: 0.001 XBT
Today it's 0.001 bitcoins, I wonder what the fee will be next year.
Other notable bitcoin fees:
- Wallet transaction: 0.0005btc (minimum)
- ATM: 7.5-10%
- Credit Card (Coinbase for example): 3.5%
Bitcoin has come a long way from being a decentralized fast cryptocurrency to become the complete opposite: centralized (in China) and slow. Being at the mercy of miners, their ever increasing fees and slow transactions, is bitcoin still a viable solution? Bitcoin has lost its way and become more of a monopole, to me, that sounds like the banks cough.
Meanwhile, the altcoins (alternative coins) have emerged and are booming. Why? Because they are solving the numerous problems plaguing bitcoin. Altcoins are promising much lower fees, faster transaction, more privacy (some are boasting untraceable transactions), etc. For example, DOGE is one of my favourite. I've been doing a lot of transactions with it lately, and let me tell you how impressed I am. Whether I pay 1, 2, or 5 DOGE for my transaction, the confirmations times are virtually the same: under 1 minute. On a very busy day, that can go up to 10 minutes! Still WAY below what bitcoin is delivering. And what about Ripple? Well, that's an instantaneous transaction with an extremely low fee too. There's over 800 altcoins right now and their number will keep growing. Most of them are shitcoins, but the significant ones do have a bright future, combined with solid and serious development. While bitcoin development teams struggle for concensus and aren't really solving any problems.
So my friends, these are the fundamentals of bitcoin. Before you even consider investing in bitcoin and follow what the herd is doing because of FOMO, you should pause and get informed about these underlying fundamentals. The impressive surge in bitcoin's value since April 2017 has been nothing but speculation. The fundamentals are still bad and getting worse, yet the value is increasing! That doesn't make sense at all and is a clear indication that things will get sour soon, and they have already started.
Bitcoin has made millionaires indeed, but those people bought it when it was in its infancy and (for most of them) totally forgot they even owned any bitcoins, or litterally lost their wallets! This promise of making new millionaires is what's driving people to FOMO. Unfortunately, such days won't happen again. How many of you have heard people talking about bitcoin going to $10,000, $100,000, $1,000,000? If bitcoin was the ONLY cryptocurrency in existence, then perhaps I could believe that, but when I read such claims, I can't help but chuckle. To me, those guys are simply ignoring the fundamentals and living in a fantasy. Right now, Ethereum is almost catching up with bitcoin's market capital, while bitcoin's market dominance is at 40%. The other altcoins are on the rise too, so it's a matter of time before the king will be dethroned. (http://coinmarketcap.com)
Bitcoin has been a revolution, has made millionaires, has paved the way to new cryptocurrencies and innovations, no doubt about that. We should be thankful for that. But I think it's time to let the beast rest and let its offspring evolve and fly. The future belongs to cryptocurrencies.
Recommended readings:
The resolution of the Bitcoin experiment
Bitcoin Price Growth Is Speculation, Bubble Will Burst: MacLeod
Quote: "I'm sure I'm not the only one who has experienced that inconvenience. Since that day, I totally changed my view about bitcoin and realized that it's NOT a practical currency anymore."
So are you saying Bitcoin has failed? Because I don't believe it has.
Yes fees have been rising, and I don't like it, however I've made many transfers within a reasonable amount of time (15 minutes low end, 6 hours high end). I don't get all of the complaints about stuck or long transaction times. It seems as if the fees were set way too low.
I'm saying bitcoin is declining and will fail eventually, because given the current state, I don't think it's a sustainable solution for the future. People might still consider it an investment (they often compare it to the gold of cryptos), but from the practical point of view, it's not delivering. Altcoins are bound to take over.
click here!This post received a 20% upvote from @randowhale thanks to @drakos! For more information,
Nice post, you know your stuff, thanks for sharing and I hope to see more information like this from you, very interesting.
Thanks for the feedback. I do spend a lot of time reading and keeping informed. Knowledge and analysis are powerful tools, I'm happy to share it on Steem :)
Thanks for this useful information.
My five cents on this topic here: https://steemit.com/bitcoin/@cryptotrade007/what-is-fundamental-intrinsic-value-of-bitcoin