Seasoned investment guru Mr. Ted Bauman did a comprehensive article breaking down the current limitations of bitcoin’s underlying technology hindering it from achieving its overall goal of becoming the most popular form of conducting transactions considering how secure it is and the fact that it is a decentralized form of currency. According to Ted Bauman, the function of a currency is to process transactions not only securely but also in a timely fashion. This is yet to be achieved by bitcoin as it currently compares very poorly when put side by side with the leading transaction processing platforms such as Visa which according to publicly available data has the capability to process more than 24,000 transactions each second as opposed to bitcoin which can currently process 6.5 transactions per second. In addition, there are reports of users waiting for 10 minutes on average to process a single transaction on bitcoin, with the longest waiting time recorded to be over 40 minutes. The unfortunate fact is that the situation can only worsen as more people join the Bitcoin platform.
That being said, there is a huge balancing task that will definitely go into trying to improve bitcoin’s underlying technological infrastructure. This is because bitcoin is an encrypted digital currency which exists within a network of computers hence its decentralized nature. This means that whenever a transaction occurs, all nodes connected to the bitcoin ecosystem have to update in real-time making it secure and private, free from manipulation from governments and the financial agencies like the central banks. Research has shown that there have been conscious and deliberate efforts aimed at trying to reduce the painstakingly long transaction processing times. In order to reduce the processing time, the most probable solutions involve reducing the amount of data processed in each and every bitcoin mining block. Conversely, the size of bitcoin’s mining blocks can be increased so that more data can be up for processing at every go. The tradeoff is that all of these approaches involve moving some data out of the blockchain, as a result, reducing the security of the Bitcoin platform.
A note about Ted Bauman
From 2013 Ted Bauman has been working with Banyan Hill Publishing as the Editorial Director. He is also the editor of the Alpha Stock Alert, Plan B Club and the Bauman Letter in which he provides invaluable pieces of advice and opinions on a number of subjects including privacy and low-risk investment.