The concept behind a peer-to-peer digital currency that’s controlled by the people rather than a private central bank is highly appealing in this day and age of ever-rising inflation. But the practical use of cryptocurrency is a completely different story, particularly with Bitcoin, which a new reportsays simply can’t be properly scaled for widespread use. The Bank of International Settlements (BIS) says that, when it comes to using Bitcoin as money, the sheer amount of energy and computing power required to complete transactions is too astronomical to work on a global scale. Some major changes to the platform would thus be necessary, in other words, to make using Bitcoin as simple, easy, and quick as, say, using credit instruments Mastercard or VISA.
Entitled “Beyond the Hype,” the BIS report highlights, among other things, how making a payment with Bitcoin is incredibly slow. The Bitcoin system can only handle a handful of transactions at one time, compared to the tens of thousands that VISA and Mastercard can process in just one second. This makes using Bitcoin to pay for groceries, as one example, a sheer impossibility in the event that thousands or even millions of users are trying to do so at the same time.
Part of the problem is the current iteration of the Bitcoin ledger system, which is verified and updated among a pool of Bitcoin users that collectively confirm each transaction, as opposed to a single, centralized entity. This peer-to-peer model requires a whole lot of energy, and it just takes more time than the more traditional payment systems that most people are used to using.