Is Bitcoin The First Killer App In Cryptocurrency Blockchain?

The first recorded use of the term “Killer App” in print was 1987, in PC Week 8 Sept. 107/2. “Everybody has only one killer application. The secretary has a word processor. The manager has a spreadsheet.”

In marketing terminology, a killer application (commonly shortened to killer app) is any computer program that is so necessary or desirable that it proves the core value of some larger technology, such as computer hardware, a gaming console, software, a programming language, a software platform, or an operating system. A killer app can substantially increase sales of the platform on which it runs.

A cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets. The decentralized control of each cryptocurrency works through a blockchain, which is a public transaction database, functioning as a distributed ledger.

A blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography.

Blockchain was originally designed with just one goal in mind: to support an electronic medium of exchange as an alternative to fiat currencies issued by a banking system that failed so badly in 2008.

(Extract from Wikipedia)

 

Is Bitcoin The First Killer App In Cryptocurrency Blockchain?

Bitcoin is a term, used interchangeably between an application app for blockchain and as a cryptocurrency.  It truly thrust cryptocurrencies forward in the late 2000s. There are many, actually thousands of cryptocurrencies floating out on the market right now, but Bitcoin is by far, the most popular one.

Does its popularity equate to, be being branded as a killer app?

Many (from Bankers, Financiers, to Bitcoin detractors) would like to differ on the above?

The continuous debate on the claims of Bitcoin as

1. A stable store of value
2. A currency of exchange
3. As an alternative investment asset class

are still on-going. Never yet settle!

Why is it so?

Bitcoin has three main major challenges (that need to be overcome before people could comfortably use it for its great core values).

 

1) Bitcoin has been incredibly volatile since its inception. You might argue that a currency that fluctuates by 15% on a normal day cannot possibly replace current more stable Fiat currencies.

So the question is, why do the prices change so much in the first place? It comes down to supply and demand: It has only a fixed total supply of 21 million and yet demand for it is uncertain and constantly fluctuating, thanks to speculation.

 

2) The adoption rate is low due to its scaling (cost) issues and ease of use.

• The underlying technology behind bitcoin, the blockchain, limits the amount of information that can be contained in each block to 1 megabyte of data. This limitation allows for a maximum network capacity of about three transactions per second. With current rising interest in Bitcoin, the transaction cost is steep if you want to get your bitcoin transaction confirmed earlier by bitcoin miners.
  
• To be fair, it has gotten much easier to buy, sell, and use bitcoin over the past several years, but it still isn’t user-friendly enough to encourage mainstream adoption. Currently, if the average person wants to buy bitcoin, he or she needs to open an account at a bitcoin exchange such as Coinbase, link a checking account (or credit card, which generally comes with a higher fee), and in many cases wait several days for the transaction to clear.

 

3) People who are buying into bitcoins could be holding on to the digital currency in the hope that bitcoin prices will rise much higher and as a disaster or inflation hedge. Rallying prices are tough to ignore, but investing in such high volatile asset can be traumatic. No one can tell with certainty that Bitcoin will be the de-facto asset class as digital gold for years to come.

 

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Many technologies have been developed to solve the item 2) Bitcoin’s scaling problem. The two in particular are looking very promising, Segwit (which stands for ‘Segregated Witness’) and the Lightning Network.

 

What is Segwit (Segregated Witness)?

Segwit’s approach to increase the capacity of the bitcoin network is to move transaction signatures from the beginning of a Bitcoin transaction to the end, and to weigh them differently compared to other data against the size limit.

The several benefits are:

• Adds several security improvements to the Bitcoin blockchain.
• Has double the current capacity, so if all payments were sent on Segwit they’d be faster and have lower fees.

 

What is the Lightning Network?

The Lightning Network proposes using smart contracts to create payment channels that only have to sync with the blockchain after a fixed amount of time. e.g. multiple payments might be processed off the blockchain, then all of them added in one blockchain transaction.

Benefits of the Lightning Network:

• Transactions sent over the Lightning Network are much faster than even Segwit.
• Reduces congestion on the main Bitcoin network.
• Allows users to not require direct channels between each other as long as they have an open path via other users.

 

Notes:-

1. The Lightning Network raises security concerns about users creating fake payments – which is why Segwit also needs be implemented (as it solves this security issue).
2. A downside of the Lightning Network, and Segwit, is that technically they’re quite complex – so the learning curve for developers and even users is much higher than the current Bitcoin network.

(Extract from Anything Crypto)

 

 

Conclusions

In my opinion, Bitcoin could not be called a killer app if mainstream concern of its price volatility is not fully addressed.

Any currency needs to be stable in order to be used as a trusted medium of exchange.

With a truly stable currency, you can have currency conversion, remittance, ATM withdrawals and other financial services with lower fees than fiat systems.

In other words, it can be used as intended — as money. This is what will ultimately attract a mainstream audience and will actually incentivize them to make the switch to cryptocurrency.

 

 

 

“Cryptocurrencies are an experiment. The number and different forms of cryptocurrencies is growing internationally. It is too early to say if they will succeed.

If some do succeed, their full implications will also not be known for some time,” the deputy prime minister

Many consider the entire cryptocurrency system is still an experiment.”

– Singapore Deputy Prime Minister Tharman Shanmugaratnam