Can Bitcoin scale to keep up with demand created by Steem?
2 weeks ago by dantheman in bitcoin
I recently read an article by @eeks titled "Steemit is Bitcoin's Killer App". I think it is a great article and contains a lot of truth in the short term. But reading it got me thinking. Bitcoin may not be able to maintain its position of gateway to the altcoin world.
The Block Size Problem
The Bitcoin blockchain is currently at its maximum capacity. Fees are rising. Bitcoin supports about 300K transactions per day. This means that Bitcoin can only support 9 million people making one transaction per month. Going through an altcoin exchange requires at least 1 bitcoin transaction from an altcoin exchange to a bitcoin/fiat exchange.
Steem User Growth
Steem has the potential to grow faster and reach farther than any prior crypto. It is entirely conceivable that Steem could reach millions of people in the next year. If these people were to use Bitcoin as a gateway to buy in and/or cash out each month then it could more than saturate Bitcoin's capacity all by itself.
Even if Bitcoin doubles its block size, the combination of existing transactions and any new transactions generated by Steem users would saturate the network. Market forces and transaction fees would cause people to bypass Bitcoin. There is no reason for Steem users to get into Bitcoin except speculation when Steem Dollars are available for savings and commerce.
Steem onboards people to Steem
The people Steem reaches that Bitcoin couldn't will still have no use for most of the other cryptocurrency projects. Just because Steem is a cryptocurrency doesn't make learning the value of Steem the same as learning the value of Bitcoin and other crypto projects. People want STEEM because of what it does for them. The value proposition of other cryptocurrencies remains unchanged.