Is Bitcoin the right sort of payment option for you?
Jan 28, 2018 Posted / 8907 Views
The critics often say that Bitcoin is not at all a useful payment system. However, before passing any sort of judgement we need to see how it works. For initiating a bitcoin payment, first, you need to broadcast your intention to the network that you want to send some bitcoins. This is then picked by the "miners" who process the transaction in return for fees and newly acquired bitcoins. If everything goes well, the transaction gets included in a block, which then becomes component of the international immutable ledger known as the Bitcoin blockchain.
Read More Related Articles
Nonetheless, whatever rants the critics engage in and despite several complaints about Bitcoin's being a no regular utility option, the network is witnessing quite a lot of payments. You can imagine the sort of involvement it has seen from the figures of last three months of 2017, the bitcoin network processed almost $150 billion in transactions. The figures are nearly ten times up from its earlier year numbers and more than 7x to what Western Union transfers among consumers in a typical quarter. However, one thing which is noteworthy is that the rate at which the transaction fees have grown is not in proportion to the number of transactions that have grown. In fact, the number of transactions has just remained the same for a while now.
So, this is what the critics say that bitcoin cannot be used for everyday transactions. For instance, you might want to pay for a coffee, the amount will be picked up the miners, who favour the ones that provide the opportunity for the biggest fees and you will have to wait for it to be picked and then processed. The ideal payment gateway is not that way and meant for the day to day transactions.
Nevertheless, if you are the one who wants to exchange millions, you can easily afford to pay additional $20. but not if you want to pay for the pizza. As a result, diminutive transactions can languish, it is some kind of imbalance that has led some people to attack Bitcoin and call it just another toy for the aristocracy.
One popular workaround involves exchanges and wallet providers which hold Bitcoin on behalf of millions of individual customers. Coinbase last year concluded that the company were storing about 10 percent of all bitcoin in circulation, and others have likewise huge balances. This works well in the case with people who use the same provider as in that case Bitcoin payments can be made almost instantly through the provider’s own books, without the cost or delay of broadcasting to the blockchain.
So transactions can be fast and cheap, as long as users are willing to rely on a trusted central counterparty. But, that’s precisely the kind of system that Bitcoin was designed to circumvent. Additionally, wallet providers and exchanges have become major targets for hackers.
There are some solution providers which solve this problem. Some platforms allow people to create two-way channels through which they can make numerous small payments, with only the final balances settled on the blockchain. To deal with the issue of trust, it requires users to put down deposits that can be forfeited if they fail to make good on their obligations.Other solutions based on the same technology might even enable decentralized exchanges.
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 .
Hottest Blockchain Newsletter
For updates and exclusive offers, enter your e-mail below.