More than 118,000 transactions were stuck yesterday, unable to move, as bitcoin’s capacity reaches breaking point, sending fees to an all-time high of $1.50 per transaction, up $0.50 cent for an average transaction.
The matter quickly became a topic of debate as users started complaining in public with one bitcoiner stating he had to pay a fee of $2.10 for a $20 transaction. The reason is because bitcoin’s capacity has hit a limit. As such, it isn’t currently able to process more than 250,000 transactions with the only current solution being to pay a higher fee than anyone else.
There have been many proposals to increase bitcoin’s capacity, but the matter has divided the community, which instead of coming together, has plunged into in-fighting and general incivility.
After two years of vicious “debate,” nothing has changed, with the two camps having almost the same level of miners’ support. 35% of the hashrate is currently favoring segregated witnesses (segwit), a proposal by Blockstream employees which nearly doubles capacity while allowing for layer two protocols such as the lightning network (LN).
Critics say LN would centralize bitcoin, thus they support Bitcoin Unlimited (BU), with 40% of miners favoring this proposal which gradually increases capacity as required to maintain it above demand.
Segwit supporters say BU would be centralizing, thus leading to the current stalemate which doesn’t offer much resolution in sight. The problem of ever increasing fees and delays, therefore, continues, pushing many out.
Bitcoin’s market share stood at around 95% last year, but bitcoiners began to look for alternatives after it seemed somewhat clear a stalemate had formed. Primarily, they looked to ethereum, which provides as good as instant transactions for almost no fee due to their roadmap of reaching unlimited scalability.
Other digital currencies have benefited too, sending bitcoin’s market share to 56%, an all-time low and close to below majority share. That has given rise to talks of a flippening, a point when ethereum’s market cap takes over bitcoin’s.
Will it happen? Who knows, only time can say, but the current trend seems to suggest it may do so and it may do so fairly soon.