uploads/// Bitcoin mining process

Is Bitcoin Ready to Replace Real Currency?

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Jan. 23 2018, Updated 6:00 p.m. ET

VanEck

Bitcoin is a slow and volatile form of money. How can it be a real currency?

Bitcoin is slow by design, and is not meant for transactions. Blocks (collections of transactions) need several minutes to process. Bitcoin will never be as fast as Visa or the NYSE which process thousands of transactions per second. Further, bitcoin transactions may result in embedded gains or losses, and therefore tax consequences. Like gold, digital gold is not designed for transactions.

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Mining bitcoin is a slow process

The creation of a new bitcoin (SOXL) (SOXX) involves calculation of a very complex but easily verifiable mathematical problem. This calculation in itself has no value but is performed only to show the proof that it has been done. The amount of time and energy spent in this process, which has no value, has been the subject of much criticism. The other update that needs to be done on the platform is to continuously record bitcoin transactions on the exchange.

Limited transaction capacity

Despite the higher number of transactions that need to be updated regularly by users, the transaction capacity is intentionally kept very low by the bitcoin founders. Currently, users have only 1 MB (megabyte) of data allowed per bitcoin block or for every ten minutes. The limited time and capacity mean users must outdo each other in order to update transactions and mint bitcoins.

As a result, updating bitcoin (ARKW) transactions is a very slow process. Earlier, it was possible to update bitcoin transactions in about ten minutes. However, recently, it often takes hours for the transaction to get confirmed. You can’t wait for hours to buy stuff through bitcoin, thus raising doubts about its usability in the real world. Accordingly, there could still be a long way to go for bitcoin to be accepted as an actual currency (UUP) (FXE).

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