What's Next For Bitcoin?

Bitcoin is dead. Probably.

Bitcoin isn't dead because the price has plummeted since it has returned to the price it first set in late November of last year, just over two months ago. Nor is Bitcoin dead because of regulatory pressure, which will be at best a light touch given the global nature of the currency.

It's dead because the technology is flawed.

No, not the crypto part of the technology. If you're in Bitcoin, worry about the digital wallet you've chosen; don't worry about someone hacking the blockchain. Blockchain hacking is highly unlikely to be a problem, but digital wallets appear to be made of hacker catnip.

Bitcoin is dead because the cost of a transaction is too high, on a wide range of fronts.

You can see the historical chart of Bitcoin transaction fees here, though there are fees on top of those for very nearly every transaction. As of this writing, the fees stand at a little over $8. This means if you want to use Bitcoin to buy a coffee, it won't the exorbitant price of your venti Starbuckachino that you first see. It'll be the roughly 200% transaction fee.

Beyond transaction fees, Bitcoin simply isn't scalable. This isn't a blockchain problem; it's a Bitcoin implementation problem. The Bitcoin blockchain is now more than 155 GB, and it's growing at a rate of about 0.11 GB per day. The absolute maximum number of transactions on Bitcoin is 7 per second. That means your Starbuckachino may get cold while you wait for the approval to come back.

VISA, by the way, manages about 2,000 transactions per second and claims to be able to handle a burst capacity of 56,000 transactions per second.

So perhaps a more precise reason Bitcoin isn't a long-term solution is that the technology doesn't support the business case for its existence. Other cryptocurrencies do (and can) support various business needs, though.

I suspect one size will not fit all. For that, we have the US Dollar.