Libra's Launch Represents An Infection Point For Bitcoin

The pop-up and subsequent drop of Bitcoin over the last 48 hours has been seismic and shocking, even within a market shown for its instability. The highs pushed the worlds largest cryptocurrency up to over 22% in 24 hour period and going along for the ride were the many thousands of altcoins, pegged on various crypto exchanges to BTC. This represented a tremendous shot in the arm for blockchain projects all across the world who relied upon the sale of their crypto to fund their innovation.

What we learned from this return to a near December 2017 price level is that bitcoin still has a few kinks to work out in terms of its scalability. Chief among these difficulties is the relative expense of Bitcoin transactions. At the present time, the recommended fee to send a simple transfer across the Bitcoin blockchain is 164 satoshis/byte, meaning that you need to send at least a few USD in order to have a reasonable chance of getting your first confirmation through in the next 3 blocks (30 minutes), irrespective of how small the transaction. Further confirmations will require a good deal more time to be validated.

As people start to get to know more of the blockchain and Bitcoin ecosystem, an exposure that the Facebook coin Libra is bringing to the fore, it may become more readily apparent how so many coin projects are building upon on Bitcoin's greatness. While it's the biggest name on the block, attracts the most headlines, and enjoys the highest level of adoption, many of these altcoins have done a phenomenal job at picking up where the coin's architect Satoshi Nakamoto left off.

At least three things must be done for Bitcoin to be ready for primetime as a currency that will not just be a few dozen billion dollars in valuation but something much more significant that'll play a role in the world stage to compete with fiat.

1). Embrace the use of the Bitcoin lightning network. Ethereum, the #2 cryptocurrency by market capitalization, is giving Bitcoin a run for its money by virtue of its 12 second block time and the significantly less expensive cost to submit a transaction through their blockchain. Couple that with the fact that most altcoin tokens make use of Ethereum's ERC-20 technology, to say nothing of DeFi and Dapps that make use of its blockchain architecture as well, lead many to believe that Ethereum does most of the cryptocurrency heavy lifting while Bitcoin does all of the posings.

Bitcoin cash ABC has similarly inexpensive fee structure. You can get a transaction sent out for virtually nothing, and this should be the standard for Bitcoin as well. I had tickets to the Bitcoin 2019 conference in San Francisco this week, and a vendor provided a handsome amount of bitcoin lightning satoshi for spending, and I was impressed to see how easily and seamlessly the transactions go through with very user-friendly wallets. Some technically talented hobbyists are putting considerable effort into this project in the hopes that Bitcoin will continue on its upward trajectory of not only a symbolic coin held for investment purposes but also a practical coin that can be used with ease all across the web and brick-and-mortar retail stores alike.

2) The bitcoin speculation markets have to recognize that the numbers they see with bitcoin trading are not traditional stock market numbers but are forex market numbers, into the hundreds of billions, that will continue to grow by virtue of the generous leverage afforded traders. Coinbase is still down as of this writing, hugely important given their tremendous footprint in the industry with thousands of users who are decidedly discouraged over not being able to access their cryptocurrencies, at a time when 2 or 3% dips and jumps represent hourly movements. During the drop, Bitmex saw shocking numbers of many billions of dollars on a 15-minute basis, and it was stretching the capacity of their well-equipped systems.

3) Address the legal ambiguities surrounding cryptocurrencies for many wealthy jurisdictions. While it looks like Libra is milking influence that Facebook has in various markets to push by regulators the reality of cryptocurrency in possession of their citizens, there still is a long way to go. Industry sources are widely reporting that countries are employing forensic blockchain technology government snoops at the IRS and NSA to pour over the very public bitcoin blockchain. It's been widely seen that Coinbase, an exchange exceptionally friendly with regional regulators, will look to see where a transaction is going and if they don't like the looks of it, then your account is likely to be banned for a ToS violation. Users of exchanges are always told not to keep their bitcoins on exchanges lest they go down a la Crytopia, Binance, and Coinbase, which leads to many more transactions to and from the exchange from one's cold storage wallet. This, in turn, makes the bidding process of getting onto one of the next blocks that much more competitive and expensive.

The grand reveal of Libra represents a crucial pivot point to educate people as to what a cryptocurrency is and what it is not. Libra has the potential to act as a gateway for those who may reconsider a return back to the speculative world of Bitcoin.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Seekingalpha.com

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