Ted Bauman Warns Of Transaction Problems With Bitcoin
There has been a lot of talk in the news recently about Bitcoin. Many people have invested money into it, thinking that the prices will go up. There are many advantages of using Bitcoin, ranging from security and privacy to the absence of any regulations by governments, for the most part. However, financial expert Ted Bauman says that there is a major problem with Bitcoin. If Bitcoin is to be scaled and become a global currency that is actually used by people all around the world, then this problem has to be fixed. The problem is that the networks that control Bitcoin transactions can complete only a limited number of transactions at a time. Learn more on Seeking Alpha about Ted Bauman
Ted Bauman writes about this in his highly sought after publication, The Bauman Letter. In an issue of the newsletter, he asks his readers to envision what life would be like sometime in the future when everyone is using Bitcoin to conduct their daily transactions, as Bitcoin enthusiasts predict.
Let us say that you have parked in a garage and you need to pay a fee in order to get out. Let us also say that you do not have any cash or credit cards on you, and you need to pay in Bitcoin. What if the Bitcoin transaction takes half an hour in order to go through? What if it takes an hour to go through? You may be stuck in the garage, unable to get out.
Bitcoin is not the same as credit cards. Credit card networks can conduct thousands of transactions each second. Visa can actually process up to twenty thousand transactions each second. Bitcoin, on the other hand, can only process up to seven transactions per second. This means that during busy times, you can end up waiting a long time for your transaction to be processed. It is not uncommon for a transaction to take forty minutes to be processed. If everyone will start using Bitcoin, it is very likely that it will start taking much longer than that. People will not want that, so Bitcoin does not yet have the capability to become a global currency that is used by everyone.
Ted Bauman is the editor of The Bauman Letter. He writes and edits for Banyan Hill Publishing. He has years of experience with investing.