The Shortcomings of Bitcoin

What does Bitcoin get wrong?

Bitcoin has many factors that make it a suitable solution for the transfer of value and storage of wealth, but as the first generation of cryptocurrency and the 'draft concept,' there are also many issues with the system.

Transaction rate

The transaction throughput for Bitcoin is incredibly low. At seven transactions per second (TPS), Bitcoin has scalability issues that will eventually cause it to be unsuitable for general use as a payment system. It is for this reason so many developers are trying to create side chains, Layer-2s, and other ways to increase the Bitcoin capability. However, at its core, it will always be a network created based on computing technology from 2009.

Transaction costs

When the Bitcoin network starts getting busy, the 'gas' to complete transactions starts to go up and can significantly increase both the transaction finality time and the cost of performing the transaction. This means for anyone wanting to send $10 of Bitcoin, the costs could be more than the amount being sent, making Bitcoin completely unsuitable as a layer-1 for any kind of small payment.

Bitcoin mining juggernauts

Bitcoin mining is all down to the difficulty in the 'proof-of-work' system. This means those who are already rich in fiat value have a significant advantage over those that are not. With the ability to purchase vast quantities of computational processing power in giant facilities, the power of this new currency is already in the hands of large-scale miners. As a network designed to be decentralized and help the 'little guy,' this is already a huge step backward.

Lack of Smart contracts

Bitcoin is a very simple P2P system for transferring the digital asset Bitcoin. The network itself has no other built-in use, and any other use case built on top of the Bitcoin network will only amount to transaction congestion. Ethereum overcame this but is also plagued with its own problems that will eventually cause it to peak at usability.