Bitcoin can't be the future of cryptocurrencies?

Bitcoin can't be the future of cryptocurrencies?

The purpose of Satoshi Nakamoto’s creation of Bitcoin is to create a peer-to-peer electronic cash system whose most fundamental purpose is to replace fiat money. For fans of the most fanatical cryptocurrency, cryptocurrency is the future of money and will take over the current economy.

But there are still many problems we need to face in order for the economy to operate on the blockchain. The most obvious obstacle so far is TPS. Based on the current processing speed of Bitcoin, Bitcoin can only process more than 1 million transactions per day. For a small economic market, Bitcoin may be able to support it, but for a very large economy like the United States, This is undoubtedly a fantasy.

In 2017, the US gross domestic product (GDP) is close to 20 trillion US dollars. GDP is not an important indicator to measure how much money is transferred in a year, but it is obviously enough for us to do data analysis. If there are about $20 trillion in the US in 2017, then about $54 billion will change hands every day. For the time being, no matter how slow Bitcoin handles transactions, if Bitcoin wants to process $54 billion in one day, Then Bitcoin must have an average transaction volume of $54,000.

What is the concept of an average daily transaction of $54,000? Between 2012 and 2017, US consumers’ online transactions amounted to about $80, and $54,000 meant that a consumer’s spending was 650 times higher than today’s.

So, assuming that consumers spend an average of $100 per share, then $54 billion means there will be 540 million transactions a day, about 6,000 transactions per second. If we consider that most transactions are generated during the day, then The average number of transactions per second during the day is approximately 10,000.

Back to the original question, how many transactions must the blockchain process per second to support the US economy? Our rough calculation of 10,000 transactions per second is almost certainly not enough, but it does provide the basis for what we can work with.

Visa processes an average of approximately 1,700 transactions per second, but during peak hours it can process up to approximately 24,000 transactions per second. Their ceiling is an order of magnitude higher than the average to handle special days like Black Friday or Christmas.

Taking Visa's data as an example, since 10,000 transactions per second is a rough estimate of the average, we may need to be able to process about 100,000 transactions per second to actually kill Visa, more precisely, this bit. The coin is about 10,000 times faster.

So the emergence of Bitcoin lightning network can solve this problem? In the eyes of mathematicians, this is not only inefficient but also clumsy. “In practice, it encourages users to open a single channel with a centralized liquidity provider on the blockchain instead of opening multiple channels. This creates an unregulated central bank, which, in my opinion, It violates the core principle of blockchain technology. The digital currency perpetual contract exchange headquarters directly recruits agents at all levels of the country, generations, and generations, Penguin number 2127552991. Worse, because the transaction is carried out under the chain, and Channel data cannot be reconfirmed deterministically, and if the lightning network node crashes, both parties can easily lose money."

Although Bitcoin is not able to support commercial use, in the eyes of mathematicians, there will be a high-performance blockchain that will support the US economy.

“Perhaps in the next 20 years, you will see daily payments in cryptocurrencies.”

Source: Chain to Finance

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