American Banker, a daily trade newspaper that has been covering the financial sector since 1836, recently featured an analytical piece by its editor-in-chief Marc Hochstein entitled “How I missed the point of bitcoin,” to demonstrate how Bitcoin has shown what global banking should be.
Fees and speeds
In 2012, Hochstein noted in an article entitled “Lightning fast, dirt cheap: bitcoin shows what banking could be,” that a new peer to peer digital cash system has emerged. Five years ago, Hochstein praised the Bitcoin network’s ability to settle transactions with low fees and at fast speeds without the necessity and involvement of intermediaries or mediators.
The decentralized nature of Bitcoin remains identical but what has changed in Bitcoin is its fee and settlement speed. Due to the explosive growth of the Bitcoin network and its market, average Bitcoin transaction fees have increased beyond $2.5. In addition, at certain periods wherein the Bitcoin mempool, the holding area of Bitcoin transactions for the miners, is full of unconfirmed transactions, the confirmation of transactions can take hours.
However, Hochstein remains optimistic towards the core principles and functions of Bitcoin that include the settlement of transactions and transfer of data in a decentralized, transparent and fair manner. Although Bitcoin transactions can cost up to $2.5, scaling solutions such as the Bitcoin Core development team’s transaction malleability fix segregated witness (SegWit) are imminent.
After all, Bitcoin is a technology and it is in its early stage. Like all Blockchain networks, Bitcoin is in the process of scaling and addressing the rapid growth of its user base.
For instance, in the past 12 months, the most popular and widely utilized wallet platform Blockchain added more users (seven mln) than it did throughout the seven-year period from 2009 to 2016. Discussions and complaints on the rapidly rising fees of Bitcoin transactions completely ignore some of these statistics that demonstrate the unexpectedly fast growth of the Bitcoin network.
— Joseph Young (@iamjosephyoung) June 24, 2017
Financial privacy and cost-effectiveness
Since its launch, the problem Bitcoin went on to solve was not the high fees of banking services nor the issuance of an anonymous financial network. Financial privacy and cost-effectiveness came as byproducts of Bitcoin’s actual purpose. As Marc Hochstein wrote, Bitcoin’s primary focus was to establish a global digital cash system that is censorship-resistant and decentralized.
“No, the key thing about bitcoin is its censorship-resistance — something that I only obliquely touched on in my original post, when I mentioned that the currency could be used to purchase drugs on the dark web or send donations to WikiLeaks, which was then operating under a blockade by the major payment networks,” wrote Hochstein.