Bitcoin’s price has remained relatively stable, but it has been quite some time since a new bitcoin-based business or project was launched. The currency’s focus, instead, has been mainly that of acting as a hedge, but following China’s intervention on bitcoin exchanges as well as the SEC’s rejection of a bitcoin ETF, there appears little to be said about the currency save for its endless blocksize debate and the recent news of some businesses leaving for ethereum.
Coinbase, a company that offers the most popular way of buying bitcoins in the west, was the first to hedge by adding the only currency besides bitcoin to its services, ethereum. The two co-founders have been speaking of the potentials eth based tokens may have, with their medium posts suggesting their main focus is on ethereum.
Circle is another big company that sort of pivoted. Despite their withdrawals of bitcoin purchases, they say they still use bitcoin somewhere on the backend, while also saying they are building a new state channels technology based on ethereum called Sparks.
The double speak is somewhat understandable, but StorJ, a peer-to-peer blockchain based cloud storage solution, did not mince its words when they announced they are to move from Counterparty to ethereum. They state:
“Because Counterparty uses the Bitcoin blockchain for transactions, which is currently having issues with transaction backlog, our users have experienced extremely long transaction times (hours to days).
Because Counterparty transactions create small inputs and are heavier than normal BTC transactions, users have experienced extremely high fees for transactions. For the February farmer payout we paid over $1,600 in transaction fees, or about 13% of total payouts. This is not sustainable or scalable.”
Bitcoin’s median transaction fees are currently around $0.80 for average sized transactions. Even then, almost 1,000 transactions remain unconfirmed. As new transactions come in or due to block variance or difficulty re-adjustments, unconfirmed transactions fall further down the queue, leading to delays.
With eth, I was testing the MetaMask plugging yesterday and managed to send back and forth around $5 worth of eth in about 1 minute, confirmed each time at both ends. Not sure what fee I paid, but eth’s fees are generally sub-penny. Had that been on bitcoin, I probably would have needed to push aside that task for another day, plus would have probably consumed the $5 for the privilege.
It is no wonder, therefore, that the Brave Browser, which last year announced bitcoin payments in support of ad-free websites, last week announced an eth based token to reward its users for their attention.
It is not clear whether they somehow still use bitcoin, but for their purpose fees are probably too excessive which may indicate the eth token is replacive rather than additional. If that is indeed the case, then the switch after such a short time may indicate bitcoin is being replaced with eth as the go to blockchain.
That may explain the currency’s recent rise from around $1 billion in market cap to nearly $5 billion. As well as its price rise from a bottom of $5 to a high of almost $60, combined with what appears to be considerable corporate interest.
As bitcoin continues to charge significant fees and still provides an inconvenient experience through transaction delays with any resolution not yet in sight, such “do not call it a pivot” events may also continue.
If they do, the drip-drip in network effects may become a stampede as eth’s transaction numbers now near half of bitcoin’s, with the network sometime transferring $1 billion worth of value in just one day.
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