- Bitcoin is “as good as useless” and has no future as a tradeable currency says Emil Oldenburg, the co-founder and CTO of bitcoin.com, one of the world’s largest bitcoin websites.
- Oldenburg has sold his bitcoins and believes others will do the same when they realize how illiquid the market is.
- He says bitcoin’s drawbacks are high fees and transaction lead times – a heated topic of discussion in the community today – and resistance to change from people running the old bitcoin network.
- Oldenburg believes there’s a brighter future for Bitcoin Cash, a spinoff currency of bitcoin that is now being actively promoted by bitcoin.com.
Bitcoin.com is one of the world’s largest bitcoin sites, having grown its profile this year thanks to the remarkable price surge of the cryptocurrency. But its cofounder and CTO, Emil Oldenburg, a Swedish native, is extremely skeptical when it comes to bitcoin’s future.
“I would say an investment in bitcoin is right now the riskiest investment you can make. There’s an extremely high risk,” he says in an interview with Swedish tech site Breakit.
Although Oldenburg is far from the first to criticize the cryptocurrency’s viability as an investment asset, his position as an industry insider does stand out – even as he migrates to its spinoff, bitcoin cash (BCH).
“I have in fact sold all my bitcoins recently and switched to bitcoin cash,” he says, referring to the currency that split from bitcoin in August and recently overtook Ethereum as the world’s second-largest cryptocurrency. Bitcoin Cash has also gained the strong support of Oldenburg’s co-founder, Roger Ver.
Oldenburg’s big problem with bitcoin is high transaction costs and lead times. Indeed, by some counts, bitcoin transaction fees are doubling every three months, and it now takes on average 4,5 hours to confirm a bitcoin transaction. Ars Technica reported that fees reached $26 per trade recently.
“When people realize how bitcoin works, they will start to sell”
While buying, selling or trading bitcoin is not an issue today, Oldenburg says, problems surface when bitcoin transactions are recorded on the blockchain, the digital ledger that records each transaction.
There’s only a limited amount of transactions per second you can make in the bitcoin network, which in part depends on the “block size” of the memory that store the transactions on the blockchain. This bottleneck makes for a highly risky and illiquid cryptocurrency, Oldenburg says, adding that “the old bitcoin network is as good as unusable.”
The reason why bitcoin holders haven’t understood these risks, according to Oldenburg, is because most have so far only bought the cryptocurrency – but never sold or traded with them.
“As soon as people realize that this is how it works, they will start to sell,” he says to Breakit.
As the chart below shows, the lead times and fees associated with bitcoin transactions seem only to be increasing as new investors crowd the market in chase of quick returns.
This chart shows a seven-day average of the total number of minutes it takes to conduct a bitcoin transaction, since May 2016. In short, the average transaction time has been rising with the price of bitcoin. Blockchain Luxembourg SARL Even though these “up to 12-hour transaction lead times” (when moving bitcoin to and from exchanges) could be adressed, Oldenburg sees no signs of change, because the currency is purportedly being run by the ”old” bitcoin network, the members of which he calls “fanatical bitcoin talibans”.
”[They] want things this way. They see bitcoin as a digital gold and a technical experiment, as opposed to something you can actually use.”
“Bitcoin Cash is the future” In a move that could be considered ironic, Oldenburg says bitcoin.com is distancing itself from bitcoin (BCT) and has even stopped developing services around it – to mostly focus on bitcoin cash (BCH).
“It only costs $0,012 [BI Nordic: 10 Swedish “öre”, the centesimal subdivision of krona] to send a [Bitcoin Cash transaction] and there are no lead times. The only drawback is that you need larger hard drives, but that’s not a problem for most people,” Oldenburg says to Breakit.
Oldenburg says the bigger “block size” limit of Bitcoin Cash, currently at 8Mb – as opposed to bitcoin’s 1Mb – leads to lower transaction fees and a safer, more liquid investment.
All in all, he doesn’t believe bitcoin will be the currency for everyday use the world has been hoping for.
“Not as long as the network is run by this group of people [in the old bitcoin network]. The solutions will be found in bitcoin cash, that’s where I see a future.”
Based out of Tokyo but registered on S:t Kitts, bitcoin.com has tens of millions of unique monthly visitors, according to Similarweb, a web analytics site.
Bitcoin.com – not to be confused with the non-revenue making bitcoin.org – was founded in 2015 by bitcoin investor Roger Ver, and provides a range of services related to bitcoins, including a bitcoin casino, news services and its so called bitcoin “mining pool” – the site’s biggest single source of revenue – where it forges new units of the cryptocurrency to be released for trading.
That said, the company has a heavy vested interest in the cryptocurrency markets, with Roger Ver taking an open stance for the new Bitcoin Cash and against “Bitcoin Core” (i.e., BCT) for reasons similar to Oldenburg’s.
Oldenburg doesn’t want to talk about bitcoin.com revenues or to what extent they depend on trades in BCH versus BCT, but he reveals to Breakit the company makes “an awful lot of money”.
As do its employees. Seeing that bitcoin.com pays its employees’ salaries in bitcoin, many have struck gold on this year’s price surge, Oldenburg says.
“All my salary in the past three years has been paid in bitcoin,” he says.
*Correction, December 19: This article has been amended to reflect the fact that Roger Ver, the co-founder of bitcoin.com, is also an open proponent of Bitcoin Cash (BCH).