Bitcoin: 3 Reasons Why it Will Continue to Go from Strength to Strength
Bitcoin’s rapid growth over the past few years has caused its network to occasionally experience bottlenecks.
This happens when there are too many transactions to process at one time thus resulting in an unconfirmed transaction.
For small transactions it can take hours to verify, and to a beginner or someone new to Bitcoin, it can give the impression that their Bitcoin has just disappeared.
However, the Bitcoin is never lost and the transaction will go through (eventually).
Like any new technology, Bitcoin is experiencing growth and development issues. In this case, the network needs to expand (called “scalability”).
I’ve been researching Bitcoin for some time now, and I see a definite solution in the near future. This can only happen, though, if the Bitcoin community can make these fixes collectively and not independently, as the recent hard forks have shown (see figure 2 below). If they do, it will make Bitcoin more user-friendly and much more profitable for investors.
Three Reasons Why Bitcoin will get Better vs Its Hard Forks
Those in the know, and those who have done their own research, will know that Bitcoin’s underlying technology is called the blockchain. The blockchain is a digital public ledger that tracks every single Bitcoin transaction (ever).
Now, let us use the analogy that this blockchain is an Elevator for an unoccupied tower block. If the tower block starts to attract more and more tenants, the elevator’s use will increase. This will cause long delays and wait times for tenants if the number of elevators is not expanded. (Hope this makes sense . . . bear with me — see figure 1).
Now let’s say a new elevator is added in the tower block. This will increase its capacity, reduce delays and speed up journey times for all tenants.
In a nutshell, this analogy shows where Bitcoin is now. It needs to add capacity to handle the increasing number of transactions on the network.
There are three updates or modifications Bitcoin can make to solve this problem. Many experts, developers and insiders believe that these changes will be implemented within the 12–18 months.
Reason 1: SegWit
The first update is called SegWit. In simple terms, SegWit increases the size of each block on the blockchain.
It’s like being able to print on two sides of a piece of paper instead of one. You’ve just doubled your capacity.
In August 2017, SegWit was activated on the Bitcoin blockchain.
On April 26, 2017, a cryptocurrency called Litecoin activated SegWit on its blockchain. Litecoin rallied from $4.25 to more than $10 on news of the SegWit adoption. Thereafter, it surged up to reach an all-time high of $78 since the network signaled adoption — a 1,735% total gain. LTC currently trades around $55 per coin.
SegWit is already making a difference with Bitcoin and helping it scale at a rapid rate. SegWit transactions now account for over 10% of all Bitcoin transactions and that percentage will continue to grow as more exchanges plus wallet providers enable SegWit transactions.
Reason 2: Lightning Network
The next update in development is called the Lightning Network. It works on top of the Bitcoin blockchain.
The Lightning Network uses payment channels, which allows for near-instant transactions at rates of millions per second. The fees are just a fraction of a cent and local payment channels all tie into the global Bitcoin network.
Another important and exciting feature of the Lightning Network is that it can be made to work with altcoins (alternative cryptocurrency coins) through something called atomic swaps (stay with me please). Again in simple terms, an atomic swap enables the decentralized trading of blockchain assets. For example, you could trade Bitcoin for Dash or Litecoin without having to go through a centralized exchange.
The Lightning Network will give Bitcoin the speed demanded by the marketplace, and it could enable trust payment processors and decentralized exchanges.
Further information can be found from the official Lightning Network website — https://lightning.network/#intro
Reason 3: Rootstock
The final development in the works is called Rootstock (RSK).
The program offers many useful features but the one I am extremely intrigued about is the Smart Contract functionality. This feature will significantly increase the capability of the Bitcoin network.
In simple terms, a smart contract is a computer protocol intended to facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts were first proposed by Nick Szabo in 1996 and are the defacto main advantage for cryptocurrencies such as Ethereum, which has led it to be the ‘Go To’ currency for Smart Contracts and ICOs during the past year or so.
Conclusion: Bitcoin Will Consolidate and Grow
If Bitcoin adopts all three updates explained above, it will be like going from a single service motor elevator to a state of the art hydraulic elevator system with at least 10 lifts. This will solve Bitcoin’s scaling and capacity issues for the long term.
If this happens sooner rather than later, it will be a huge deal for users and investors.
Bitcoin will become even more user-friendly, and as it becomes easier to use, you will definitely see greater adoption by the masses.
What will all of this ultimately mean? THE PRICE AND VALUE OF BITCOIN WILL CONTINUE TO RISE.
The easiest way to profit is to buy Bitcoin today. By doing so, you still have an excellent opportunity to get in before the masses, and make significant returns on your investment in the short to medium term.
By Mawdud Choudhury, CEO, Meedah Group Limited — originally published on Oct 25, 2017
Meedah Group and its employees are not a licensed financial advisor. The information presented in this article is an opinion, and is not purported to be fact. Bitcoin and cryptocurrencies are volatile instruments and can move quickly in any direction. Meedah Group and its employees are not responsible for any trading loss incurred by following this advice.