Bitcoin has seen record trading over the past week. Through the frenzy, it climbed from $11,000 to its record high of $16661.66 as tracked by TradingView on heavy volume. If nothing else, this proved one thing: Bitcoin has failed to scale. Although the Bitcoin network still maintains strong hashing power (over 12 exahashes, trending upwards), it simply is not enough to process the flurry of transactions seen over this period. As Bitcoin and cryptocurrencies in general garner more awareness, this problem will only get worse. At the height of hysteria the network was clogged with over 230,000 unconfirmed transactions, and we are still feeling that days later.
Coinbase, the largest crypto exchange in the United States, has been growing its user base at an alarming rate. Estimates place its growth at nearly 100,000 new accounts per day over the past week. Undoubtedly, this is a contributing factor to the Bitcoin network backlog, but even Coinbase itself has been unable to handle the traffic. In a December 7th tweet, the company admitted that its site was experiencing difficulty, and many users were reportedly unable to log in or even access the site.
The Fallout from Bitcoin’s Inability to Scale
Users are growing irritated with Bitcoin’s stagnant development. As a result, outside developers have turned to their own devices to try to solve these issues. Bitcoin Cash and Bitcoin Gold both reflect these efforts, each having increased block size. If either of those networks gain traction, they will be better equipped to handle exponentially growing usage than Bitcoin is.
Many question the impact that the clogged network has had on Bitcoin’s price. As Bitcoin reached its peak, so did the unconfirmed transactions, and the correction that followed does seem too coincidental. Now with unconfirmed transactions halved, the price is once again on the rise. Happenstance or not? You make the call.
Lightning to the Rescue
If there is one thing that will save Bitcoin, it’s the Lightning Network. It has been a long time in development — a LONG TIME in development — but it appears to be nearing fruition. It is reportedly undergoing mainnet testing and has seen its first Lightning enabled transaction. Official release date is yet unknown, but the light is at the end of that metaphorical tunnel. Hopefully by 2Q 2018 we will see the lower fees, instant transfers, and feasible microtransactions promised by this upgrade.