Scalability has been a persistent problem for early cryptocurrencies. This issue had threatened to become an Achilles Heel for Bitcoin and Ethereum. Some crypto enthusiasts thought that the problem would be manageable provided spot prices continued to skyrocket. Regardless, transaction fees are vital for crypto-powered services on platforms like BC GAME.
That is the ultimate goal for true believers of the blockchain. Speculative crypto trading is an inevitable part of that landscape. However, the utility of various decentralized applications and protocols is necessary if the industry is to have solid long-term fundamentals. Online crypto gambling on BCG GAME is an example of blockchain utility, and such uses are as diverse as the creative minds of developers can go.
How Transaction Fees Became a Contentious Issue
Miners play a central role in securing cryptocurrency networks. For Bitcoin, mining involves individual miners picking transactions and bundling them together, hoping to add them to the blockchain. They get block rewards and, crucially, the validated transaction fees from these transactions.
When Bitcoin was in its infancy, few transactions and miners did not pick and choose which transactions to validate. Therefore, transaction fees remained relatively low. Bitcoin got more popular, and there were thousands of transactions in the queue at any given moment. Transacting parties wishing to get their transactions processed faster increased their fee. It is only natural.
Thus began the transaction fee problem. People transacting large amounts would often be willing to go the extra mile. For small transactions, the higher the transaction fee, the less the trade makes sense. Therefore, people wishing to make payments using Bitcoin, for example, could not get value for money for small transactions. All this while, the speculative aspect of Bitcoin was taking off.
The story is similar to Ethereum. For context, Ethereum is the enterprise blockchain and needs transactions fees to remain manageable. Thousands of dApps ran on the blockchain and needed it to perform transactions fast and at a low cost.
Problems from High Transaction Fees
Therefore, Ethereum gas fees became a significant issue with time. People had to pay gas fees as high as $30, which was not sustainable. Whales who moved large amounts did not mind paying the transaction fees because they thought about the higher spot prices down the line. The same is true for Bitcoin. However, the regular user of ETH for gambling, gaming, and such utility functions felt the brunt of this force.
These issues made users relieve the problems with centralized finance. Credit card fees and bank transfer costs were supposedly the problems. Therefore, it was pretty ironic that this revolutionary payments system would have the same issues.
It became apparent that this issue would need solving. Ethereum was getting competition from blockchains like Cardano and Polkadot and would have to shape up fast. The first logical step was to transition from Proof of Work (POW) to Proof of Stake (POS) mining.
Other upgrades and improvement proposals continue to prop up Ethereum and Bitcoin. However, the problems still linger and have hampered regular adoption as currencies. Bitcoin is probably cast in stone as a speculative asset because of many issues with its currency usage. Its supply is pretty scarce, and the mining algorithm is unlikely to change.
Even then, solutions like the Lightning network provide some relief. Bitcoin still has to facilitate regular payments. The Lightning Network is a layer on top of the Bitcoin network. It came about in 2018 to speed up transactions by adding another layer to process transactions. This tool reduces the gridlock on the Bitcoin blockchain, which helps contain escalating transaction costs.
Scalability Is Vital For Adoption
Ethereum has the most to gain from scalability solutions. It is a race against to compete with “Ethereum killers” like Cardano and Polkadot as the king of enterprise blockchain. Accordingly, there are multiple scaling solutions to help Ethereum. Blockchains like the Matic Network provide an extra processing throughput for the Ethereum blockchain.
Therefore, the goal is to have Bitcoin and Ethereum users pay reasonable transaction costs. Bitcoin users often have to wait hours for a transaction to go through. This rate is not sustainable when banks process it in minutes.
Miners will always follow their instincts and prioritize transactions with the highest fees. The solutions have to be fundamental such as scaling the blockchain’s throughput. That is the only way to take crypto back to its early days of utility.
Admittedly, many people invest in cryptocurrencies for speculative ends. It never fails to impress when Bitcoin rallies past previous records. That is always going to remain a part of this industry. However, the goal is to have a solid foundation of utility that the walls and foundation of this house can stand.
Someone who doesn’t know about cryptocurrency will probably have heard that it is virtual money and little else. That assumption comes with another that this system is efficient. Transaction fees have emerged as the soft underbelly for cryptocurrency adoption.
If these issues continued, cryptocurrency would evolve into a one-dimensional asset class. That spot can only go to one coin, and the rest have to seek proper utility. Luckily second, generation blockchains have better scalability.
Bitcoin will probably be fine despite the scalability problems. However, Ethereum and every other blockchain that thrives on more usage could use any solution that improves utility. Gaming tokens fall in this category. They will benefit more in the long term from having a million more users on BC GAME and other platforms than prices rising by a hundred dollars. There is a correlation between the two, no doubt. However, the containment of transaction fees must come first if long-term sustainability and adoption are the primary concern.