Economist Ted Bauman knows that are hardcore bitcoin believers but he isn’t one of them. The people who are devoted to this digital currency believe it will one day replace fiat currency. They think that bitcoin allows people to move money around safely away from the prying eye of government. There’s one big problem with all this, though, which is that its underlying structure is wholly incapable of processing a lot of transactions quickly and efficiently. It’s for that reason this digital currency may never get widely used, he has reported.He shares his business views on the economy, investing, protecting assets, and other matters in his The Bauman Letter.
In a recent issue, he asked his readers to imagine a time when bitcoin is used by regular people who are out and about shopping. About Ted Bauman, he used a person wanting to use bitcoin at a machine in a parking lot. All they have available to them is bitcoin as they forgot their wallet at home.Imagine the machine accepts bitcoin, he wrote. So you pay your parking fee that way and wait for the transaction to complete. And wait. And wait. And then wait some more. It could take 40 minutes or more to process the transaction, Ted Bauman wrote, because if a whole lot of other bitcoin transactions happen at the same time this is the result.
Credit card transactions are very fast, often instantaneous. Nobody is going to put up with the slow transaction speeds of bitcoin in comparison. The business technology behind bitcoin, while amazing, can’t scale to be a truly real-world use currency. Using bitcoin would take far longer than any other way of paying for things. It’s great in theory, terrible in practice.Ted Bauman says the only way to surmount this problem is to reduce how much data blockchain, the tech behind bitcoin, needs to process. Less data would definitely speed things up. However, this introduces security pitfalls which is one of bitcoin’s main selling points. There are other efforts underway to scale the technology but he still remains dubious of bitcoin seeing as how volatile it is in value.