Bitcoin securely made having a decentralized system of exchange possible, but not efficiently
Bitcoin lacked the ability to effectively handle smart contract across people, institutions and the general internet of things. Also, as Bitcoin usage increases, transaction fees goes up and the entire transaction time becomes rather slow, sometimes taking up to 4 days for a transaction to go through. Bitcoin can process about 8 -11 transactions per second (unlike it’s competition VISA, processing 80,000 transactions per second) … in conclusion, Bitcoin is not Scalable! It’s not a currency 7 billion people can adopt in the future.
When BTC/USD was $5,000 (five thousand dollars for a bitcoin) it cost about $300,000/hr (three hundred thousand dollars per hour) to maintain the blockchain: the cost Of maintenance is even higher now that it’s $17,500/BTC . You can see that it’s gonna become rather too expensive and frustrating for Bitcoin to scale in the future. As it will become more expensive and very slow as its users increases.
Although bitcoin is secure, There is one notable security flaw in bitcoin and other blockchains: if more than half of the computers working as nodes to service the network tell a lie, the lie will become the truth. This is called a ‘51% attack’ and was highlighted by Satoshi Nakamoto when he launched bitcoin. For this reason, bitcoin mining pools are monitored closely by the community, ensuring no one unknowingly gains such network influence. But in a digital world how efficient can this community monitoring be? Not so efficient if you ask me.
Ethereum came to address the problem of smart contracts and for a while was thought to be the next 10,000x gain currency. But it turns out that it could not solve the problem of having a slow transaction rate. Currently, Ethereum can process about 12 – 15 transactions per second. This is unacceptable in terms of scalability. This means Ethereum is as expensive to maintain as Bitcoin. In addition, due to the nature of smart contracts, Ethereum forces transactions to be public (the privacy risk with Ethereum is too high) . Plus, It doesn’t mesh easily with the “real world”. You need complicated mechanisms to do even the simplest actions that rely on something off-chain.
Then came Monero. Like Bitcoin, Monero uses a public ledger to record transactions while new units are created through a process called mining. However, unlike Bitcoin and Ethereum, Monero aims to improve on existing cryptocurrency design by obscuring sender, recipient and amount of every transaction made as well as making the mining process more egalitarian. For a while, Monero was thought to be the next x10,000 gains coin for this reason. But it still could not efficiently solve the problem of transaction time per second and scalability as the network increases. Also, the feasibility of CPU mining Monero has made it viable for malicious actors to covertly distribute miners embedded in malware, utilizing the victim’s hardware and electricity for the financial gain of the malware developer. Although this can be done with user approval, This represents a huge downside for the currency, as user don’t appreciate being hacked whether directly or indirectly.
I can go on and on about other currencies like Ripple and Cardano (aka the Ethereum Killer)… however they all seem to have the same problem. Slow transactions and high maintenance/transaction fees. It appears to me that the underline problem of these cryptocurrencies is the limitations of the blockchain Technology.
Then came IOTA, this in my opinion is the currency of the future. If the entire world was to adopt a single currency, it will be IOTA. I strongly believe it’s the next sustainable x10,000 gains currency. IOTA’s transactions are free (no miners fees) regardless of the size of the transaction, confirmation times are fast, the number of transactions the system can handle simultaneously is unlimited, and the system can easily scale. The more people use the IOTA tangle network, the Faster the transaction time… I can see this currency working efficiently and fast even if it was used simultaneously by 100 billion humans. In a world of connectivity across mobile phones, laptops, home appliances and other machines, IOTA focused on providing secure communications and payments between machines on the Internet of Things. Using directed acyclic graph (DAG) technology instead of the traditional blockchain. Although, it has a few security flaws and limitations in terms of hardware. It remains brutally efficient in terms of transactions and scalability. By the way, Microsoft and Samsung are big investors in IOTA.