You’ve just arrived at the airport parking garage after a grueling flight. It’s late. It’s cold and raining. You’re tired and hungry. Home beckons.
Since it’s the year 2020, you’re paying for things with your bitcoin wallet. Naturally, the parking machines take the cyber-currency. Good thing too… you lost your real wallet, so no cash or cards.
You pay the fee. Nothing happens. A minute goes by … then two … then five. No ticket.
Twenty minutes later, your transaction goes through.
That’s exactly what’s going to happen if bitcoin’s underlying technology doesn’t change. In fact, if things carry on as they are now, bitcoin isn’t going to happen … at least not as a currency.
But there’s a fix in the works… one from which you can profit if you play your cards right.
A Decentralized Approach
Bitcoin is a cryptocurrency that exists only within a network of computers. This network is decentralized; it exists on computers all over the world. That decentralized approach is what makes bitcoin private, secure and free from government manipulation.
As I explain in the December issue of The Bauman Letter, when new bitcoins are created — a computer-intensive process called “mining” — bitcoin transactions are processed at the same time. Anybody who is trying to send or receive bitcoins must wait until the mining process has been completed to have their transaction processed.
That can be really slow… especially compared to credit card transactions. Visa, for example, processes 150 million transactions per day, or roughly 1,700 transactions per second. It could do up to 24,000 transactions per second.
The bitcoin network can only process about 6.5 transactions per second. The average transaction takes about 10 minutes to process. On some days over the last year, bitcoin transactions have taken more than 42 minutes.
