Ted Bauman Points Out the Problem With Bitcoin

Bitcoin was originally designed to serve as a nongovernmental form of money, as an alternative currency to the fiat dollars, yen, pounds and euros issued by the countries of the world. Its creator Satori Nakamoto and its early advocates did not claim it was a new asset class to buy as an investment which would grow to astronomical value. Back in those early days, none of its libertarian friends ever advised people to buy it because one day it would rise to $10,000 per bitcoin, let alone $100,000 or even the $1 million that people are now predicting for it within just a year or two. Read more on crunchbase.com to know more about Ted Bauman.

No, bitcoin was just meant to replace fiat money for every day transactions. As Ted Bauman points out in a recent article, however, the the process of validating bitcoin ownership across a distributed network is not nearly as fast and efficient as one simple electronic query. It takes time, from ten to twenty minutes to conduct the simplest transaction.

This cannot work in practical reality. No customer has the time to wait 20 minutes to pay for the meal at Taco Bell. And busy commercial businesses cannot cope with the angry crowds that would create. The bitcoin network can handle only about 6.5 transactions per second. That’s not a lot when you consider how many people around the world are buying and selling at any given moment. By contrast, Visa handles 1,700 transactions per second. But if bitcoin does not work as a currency, then why should anyone expects its value to continue to going up to the sky? What else is it good for? Visit  talkmarkets.com to know more.

It’s possible to speed it up by reducing the data in each block using a new technology called Segregated Witness or SegWit2X. However, reducing the amount of information available makes each bitcoin transaction secure. It is safe from fraud, theft and duplication only because every transaction is verified and validated by the entire distributed network. Reduce that requirement, and you increase the risk of someone cheating the system. Therefore, Ted Bauman advocates his readers continue to buy and hold gold to secure their portfolios against financial collapse.

Ted Bauman edits the newsletters The Bauman Letter, Alpha Stock Alert and Plan B Club for Banyan Hill Publishing. He specializes in such subjects as privacy and asset protection. He also writes about investment strategies using low risk assets and issues with international migration. He lives in Atlanta, Georgia.

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