Published on January 9th, 2018 | by Sunit Nandi0
How Bitcoin’s Price Has Continued To Rise Despite High Transaction Fees
Throughout the year of 2017, we saw the value of Bitcoin rising to unfathomable heights, and while this has proved exciting for many people, others were devastated about the extortionate transaction fees that came with it. Early in December 2017, it was reported that the Bitcoin transaction fee reached staggering heights of $30 per day, making purchases with the cryptocurrency almost pointless. With this in mind, we still have Bitcoin Cash, so we don’t need to worry about these high transaction fees for Bitcoin, right? Well, even though Bitcoin Cash was introduced as a way to avoid such high transaction fees, people are still feeling comfortable and secure when using Bitcoin as their main digital currency – but why?
People Value Bitcoin’s Liquidity
Sure, using alternatives such as Bitcoin Cash may offer smaller transaction fees, however they aren’t able to offer the impressive liquidity that the original Bitcoin does. Simply, this could be down to the fact that Bitcoin has been the longest reigning cryptocurrency on the market, dating back to 2009 when Satoshi Nakamoto introduced the digital currency. Now that bitcoin has become hugely prominent within a range of markets, with the emergence of everything from sandwich shops to even online casinos accepting the cryptocurrency, it’s vital to business owners that they use a currency that’s highly liquid and beneficial for their company – and that’s exactly what Bitcoin can offer. Therefore, when using a currency with more liquidity, there is less slippage involved when switching between the cryptocurrency world and the fiat currency system.
It was recently announced by the CEO of BitPesa that liquidity is one of the most important parts of using a cryptocurrency, and that, should Bitcoin Cash become hugely liquid, then that would be the currency used due to its highly liquid status and lower transaction fees. Until then though, Bitcoin’s price will continue to rise despite the higher transaction fees, as the liquidity that it offers provide a comfort blanket for those using it.
It Isn’t Always Being Used For Transactions
For some, the rise in bitcoin’s transaction fees is an outrage, but for many others, it has no effect on their interaction with the cryptocurrency, but why is this? Well, not everyone is actually using Bitcoin for transactions, and instead hold the digital currency in order to see it rise in value so that they can sell it off for more than they bought it for. In fact, Coinbase recently released some data regarding this, and found that more than half of their users were interested in simply holding the digital currency as opposed to using it for transactions between 2013 and 2016.
With this in mind, it’s simple to see why the price is still rising despite the high transaction fees – not as many people are using it for transactions! These people don’t need to worry at all about this rise, and instead can leave their Bitcoins on an exchange as the dollar signs in their eyes get larger and larger. For people more interested in making a profit with Bitcoin, all they need to consider is the one-time fee that that’ll need to afford if they have intentions of holding the Bitcoin over a longer duration.
There Is A Loophole
Despite the transaction fees being so jaw-droppingly high, people still have the opportunity to pay smaller fees instead, and this boils down to just a few simple factors. In addition, these don’t even need to be complex, and can sometimes just depend on the time of day. That’s correct – these steep transaction fees are more avoidable if you simply wait until the network is less strained, and this usually occurs at night and sometimes during the weekend too. This way, your Bitcoin transaction fees will be considerably less expensive, allowing the value of the cryptocurrency to continue rising.
Furthermore, you can gain access to very valuable information regarding the cost of these transactions fees – for example, BTC.com offers useful statistics regarding the distribution of transaction fees for Bitcoin, so you can pick an optimal fee for your transaction. With all of this information though, you’ll want a Bitcoin wallet that allows you to change transactions fees, so this needs to be made a priority if you want to avoid those more expensive fees. As there are a range of Bitcoin wallets on the market however, you’ll want to ensure you conduct your research and evaluate a range of different wallets. For examples, Mycelium is a Bitcoin wallet that offers a range of possibilities for lower Bitcoin transaction fees, such as the low-priority option.
It Isn’t All Positive Though – Steam Have Stopped Accepting Bitcoin
Although there are a few small loopholes around paying high transaction fees, as well as reasons as to why the value of Bitcoin is continuing to rise, not everyone is tolerating the movement, including the famous digital distribution platform, Steam. After accepting the digital currency for quite some time, the company announced that their decision was down to the high fees and volatility. When Steam first starting accepting Bitcoin as a payment method, the transaction fee at the time was a meagre $0.20, which has now soared rapidly to a ridiculous $20 per transaction!
Naturally, Steam need to make a profit with their games, but the higher transaction fees were deterring their customers and causing them to begrudge purchasing any games with Bitcoin. It doesn’t just end with the purchase of a game though, as if the value of Bitcoin was to increase when the user completes the transaction, and Steam has to refund this difference, the transaction fee must be paid again by the user just for the refund! They haven’t completely out ruled reintroducing the cryptocurrency back into their payment methods in the future, however they’ve clearly stated that this will only happen should Bitcoin become more reliable and stable.
So, Who Still Accepts Bitcoin As A Payment Method?
Regardless of the higher transaction fees that customers must pay, there are still several organisations who will gladly accept Bitcoin as a method of payment. At time of writing, Bitcoin is currently worth $14,708, and while some businesses will begrudge accepting such a payment with the eye-watering transaction fees, and there still over 100,000 places around the world that are willing to accept Bitcoin as a form of payment. Some well-known places include:
Many companies have turned their back on this cryptocurrency due to the inflation in transaction fees, however we certainly won’t be seeing the back of Bitcoin any time soon. With the cryptocurrency making its grand entry in a range of industries, such as the introduction of Bitcoin working in casinos, it would be impossible to eradicate it simply down to steeper transaction fees. Especially as there are many people, the general public and businesses alike, comfortable with using a liquid and valuable currency, the value of Bitcoin is only expected to carry on rising.