Playground Lessons

July 28, 2022


Read more

Heat of the Cycle

July 25, 2022


Read more

Gradually, then Suddenly

July 19, 2022


Read more

Inflation

July 14, 2022


Read more

digital
daily

digital daily: Digesting Congestion

Digesting Congestion. 5 minutes for a picture, 30 minutes for video. That’s what it took in 1998 with dial-up modem technology and its 56kbps transmission speeds. 1998 was also the year of the first iPhone, an “Internet Appliance” that predates Apple. Imaginations were captured by the potential of the internet, but most were not worried about missing out by staying offline back then. That’s where we are with digital asset technologies. Consumer intrigue, not urgency. The burden of proof lies squarely on proponents to deliver a compelling user experience. They should expect the full force of skeptics at every turn – like now when transaction costs are rising. Bitcoin’s average transaction fee has jumped to more than $30 from $2 a year ago. It’s a sign of a functioning market. True, past spikes in transaction fees are an ominous sign for the price of bitcoin. Rapid fee increases in Dec 2017 and Apr 2021 were met with sharply lower bitcoin prices in the next three months. But today’s congestion is driven by new demand, not dysfunction. On May 7, 75% of Bitcoin transactions used Taproot, the smart contract upgrade introduced in 2018 and finalized in 2021. Innovation and adoption. The rise in transaction costs is a market signal to increase investment in scaling solutions. If anything, recent congestion is great advertising for the Lightning Network. The market signal to developers is unequivocal – keep on building.

BACK