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Bitcoin Now Processing $2.5 Billion Daily

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Bitcoin Now Processing $2.5 Billion Daily

As the Bitcoin network is now processing almost $2.5 billion transactions every day following the steady upward trend of the cryptocurrencie’s value, the daily US dollar transaction value is also expected to increase.

Trader Community Vs. Hodler’s

One interesting thing to note is that the graph of a number of coins traded every day is still relatively tame. The tempered growth of these coins can be attributed to the fact that most people don’t sell their bitcoins and it’s usually the trader community that is buying or selling bitcoins daily.

Number of bitcoins traded daily

Number of bitcoins traded daily (source)

Compare it to the US dollar transaction value; it’s a different story altogether.

US dollar transaction value (source)

At time of publication, bitcoin is trading at $8,347 on GDAX, which is nearly it’s highest value. There have been various reasons like institutional interest, instability in countries and mass interest behind the meteoric growth of bitcoin, which was trading at only $800 earlier this year.

Bitcoins are still not viable for microtransactions because of the high fees they charge, and it’s meaningless to transact amounts smaller than $1,000 because of these high fees. At current, banks and credit cards can do it much cheaper. But for more significant amounts and international payments, bitcoin is leading the way.

For instance, look at the below graph for average transaction cost – it is also increasing its rapid pace, just like bitcoin price. 

Average Transaction Fees (source)

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Achieving Satoshi’s Vision of Microtransactions

In order to achieve Satoshi’s original vision as to what the currency can be, many people have advocated for the reduction of these transaction fees. This would be an improvement, in regards to buying a coffee or going to a restaurant, as currency would evolve beyond a store of value. 

Alongside Bitcoin, Ethereum does a greater number of transactions than Bitcoin, as transactions are confirmed faster and are a lot cheaper. Here is a graph which shows a number of transactions comparison:

Number of transactions (source)

The total transaction value regarding the US dollar valuation of bitcoin will keep on increasing as the price increases. The number of transactions, however, is an important metric to show how much of the currency is being used. 

There are two perspectives here.

One argument can be that since the average transaction size of Bitcoin is much larger than Ethereum, the number of transactions being less isn’t a major concern.

Here’s a chart comparing median US dollar transaction value of Ethereum and Bitcoin. On 20 November, 2017, the median USD transaction value of bitcoin was a staggering $646 whereas for ethereum was $0.65 .

 

 

Median transaction value (source)

Coexistence

The other perspective is that in the end, the real winner would be the currency that solves these problems and engenders its mass adoption. There is even a third perspective, which hopes that great currencies would coexist while serving a different purpose.

Bitcoin would grow as a store of value which can be sent across borders within minutes. Ethereum would be programmable money and vehicle for building decentralization apps, and Litecoin might evolve as a practical for micropayments.  

But if Bitcoin can reduce transaction fees, and implement smart contracts – it might differentiate itself from other currencies and be the de facto dominant player (to a great extent it already is, with 56 percent dominance.)

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