Wednesday, January 24, 2018

No, Wrecked Bitcoin (BTC) Isn't "Digital Gold"


I've been hearing that reference lately, and it seems to be aimed at the difficulty of getting in and out of Wrecked Bitcoin (BTC) -- high transaction fees, long wait times. Or maybe some BTC supporters are coming at it from the more positive side, i.e. "it's more a store of wealth than a medium of exchange."

But I don't see that the comparison runs either way.

On the "store of wealth" side, it's not obvious that Bitcoin has great use value as opposed exchange value. I can't make a piece of jewelry out of it or use it in circuitry or whatever. I guess I can use it to store information on the blockchain, but there are much cheaper, and just as indelible/unmodifiable, blockchain ledgers I can do that on.

And on the high transaction fee/long wait time side, I don't see the comparison either.

I don't have a lot of metal, and I don't trade in it, but last time I did, I could walk into just about any coin shop and buy silver at 10% above spot or sell it at 10% below spot in a hot minute. That is, when silver was $17 an ounce back in the '90s, I could drop by a little coin/metal kiosk in a building on my way home from work and buy one-ounce rounds for $18.70 or sell them for $15.30 all day long. It was about a minute out of my way and took about 30 seconds (not counting the time I spent shooting the shit with the guy who ran the kiosk).

It looks like Bitcoin fees have been dropping hard the last little while, but according to bitinfocharts.com, the average transaction fee is still north of $10 (down from a high of $55 or so). Likewise, transaction wait times have also been dropping, but they're still more than an hour (down from more than a day) according to blockchain.info. So if I'm moving an amount of Bitcoin equivalent to that $17 ounce of silver, it's costing me about six times as much and taking me maybe 50 times as long.

Note: I was surprised to see that steep drop in wait times and transaction fees this morning. I know that the BTC "Lightning Network" had its first live transaction yesterday. Is that possibly responsible? If so, maybe BTC is getting its shit together such that it will be able to get back in the game versus Real Bitcoin, aka Bitcoin Cash. But I wouldn't bet the ranch on it.

blog comments powered by Disqus
Three Column Modification courtesy of The Blogger Guide
Some graphics and styles ported from a previous theme by Jenny Giannopoulou