Here’s Why People Don’t Buy Things With Bitcoin
Thankfully, a potential fix is about to kick in.
Screengrab: Youtube. Composition: Author
You may have heard that bitcoin is a digital currency worth more than $4,000 USD. What you may not have heard is that it's basically impossible to buy anything normal with it.
One reason for this, if you live in Toronto like me (or anywhere else for that matter), is that there's basically nowhere to spend digital coins in the real world. Coinmap, a service that maps bitcoin-accepting locations all over the world, shows a few places that accept bitcoin in Toronto, but it's clearly out of date—I called several businesses listed on the site and they had no idea what bitcoin even is.
A bigger problem is perfectly illustrated in a Reddit post from Wednesday morning complaining that a bitcoin transaction worth just $9 still hasn't gone through the network after two days of waiting. Two. Days. The likely reason is that the fee attached to the transaction in order to incentivize faster confirmation—50 cents, which is about as much of a premium as I'd pay for a $9 transaction—simply wasn't enough. "Should I have paid $3 on a $9 transfer to get it processed?" the poster, who goes by "vt_dev" on Reddit, wrote. "That's fucking broken and if you think that's ok you're a fucking moron."
What this means is that during a traffic spike in the bitcoin network, if you want to pay $3 for a coffee with bitcoin, you might have to pay an extra $3 or more just to get your transaction confirmed in a timely manner. The restaurant (or bar, or shop) could let you go before the transaction is confirmed, but then they take on the risk of selling their goods for IOUs.
This state of affairs has been a looming problem for a while: We wrote about the dying dream of buying coffee with bitcoin last year. Arguments over how to fix this have torn the community apart, and splinter groups are coming up with their own solutions.
On the original bitcoin, a measure to speed up the network called Segregated Witness is set to kick in in the next day or so. If that doesn't work, there's also a planned hard fork in November that will implement Segregated Witness and double the size of transaction data blocks. On top of that, another currency called bitcoin cash already split off from bitcoin and increased the size of blocks eightfold.
Whatever bitcoin is at the moment, it's not a way to pay for things.
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