With high fees and poor performance, can BTC and ETH be used to buy a coffee at Starbucks?
Which do you believe in more: BTC or ETH?
A few days ago, a person I follow in Twitter made this question: $ETH has the utility, $BTC is the better known "brand". In which do you believe more?
I assume that the reason why he is asking this is because BTC and ETH are the greatest players in the crypto universe as it is and, frankly, I don't believe any other player will steal their places very soon.
BTC and ETH are slow and expensive
The best way to explain why I say that they are slow and expensive is by writing an example. And I will use the same example another Twitter "friend" wrote: first, assume that Starbucks accepts BTC and/or ETH as payment for their Frappuccino.
You have your BTC in your Trust wallet in your cell phone and you walk into Starbucks. You make your order, the cashier asks your name and you transfer the equivalent of US$ 5 in BTC from your cell phone to their system. Here is where things get weird: the cost of the transaction will be US$ 20 and the transaction will take 2 hours until it is confirmed. The person at the cashier will say: "Hi Diego, could you please wait until we get confirmation that the transfer was done so we can bring you your coffee?"
Updated on May 18, 2021 - this example becomes more real if, instead of paying your coffee with BTC or ETH, you would pay it with USDT, which is an ETH based stable coin where 1 USDT is equivalent to US$ 1.00 (with very small variation). Nothing else changes. The problem is still the same.
So, you actually paid US$ 25 for a coffee that costs US$ 5 and still had to wait for over 2 hours to get it. That is not practical at all. I'd rather use my credit card, where the transaction is approved in seconds and I don't pay any fees - that is not really true because credit cards actually charge a fee per transaction, and it is not low). As an additional benefit, you would be drinking your coffee 5 minutes later.
Based on this very simple use-case, it is easy to conclude that BTC and ETH will never be used by normal people in their real life. And normal people certainly represent over 80% of the worlds population. Let's say the world has 8 billion people, that means that potentially 1.6 billion could use BTC and/or ETH. But that's it: could use. The other 6.4 billion certainly will never ever ever EVER even consider using them as currency. What a huge missed opportunity...
It was not like that in the beginning
I recently watched a documentary on Youtube (I think it is in this link: https://www.youtube.com/watch?v=qk4gZrBR9CU) that showed BTC Evangelists going to supermarkets to convince the owners on the benefits on accepting BTC from their customers. At that time, they weren't talking about BTC as an investment. I think they never thought that BTC would reach $50,000. Now people say it will reach $100,000+. The supermarket owner that accepted BTC as a payment means at that time would be soooo happy today. He would have probably sold his business and bought a mansion in Malibu.
But the benefit of working with BTC at that time was basically just 1: it's cheaper than the credit card because you don't have to pay their abusive rates. And performance wasn't a problem because the network was small so it was quite fast to confirm the transaction back at that time.
That is just ironic. It was supposed to be money, better than credit cards: just as fast, secure, anonymous and cheap.
Everybody would want to use it.
Since then, BTC has appreciated 10.000x or more. Today, people don't want to use BTC, they want to keep it. It makes no sense at all to pay US$ 5 on the coffee, US$ 20 on the fees and wait for 2 hours to get the transaction confirmed. And ETH works just the same way.
These 2 communities know that, if they don't fix these 2 issues, it is just a matter of time for both projects to die. It might take some time but that would happen. They are working on these issues right now.
There are other projects around
The crypto world is not just BTC and ETH. Both together represent over 60%, sometimes over 70% of the total crypto market cap. That could be 1.4 trillion USD! But that means that the other 1.000 other crypto projects represent the other 600 billion USD.
I just checked Coingecko and so should you. Here you will see how much each of the top 8 crypto coins represent on the total market cap for crypto. BTC is around 47%, ETH is about 14%-15%. What I want to point out is this:
- The top 8 crypto coins, including BTC and ETH represent 65% of the total market cap
- Coingecko tracks 6.900 coins (whaaaat?)
- Total market cap is US$ 2.3 trillion
A question you should be asking is: why are there so many other projects. The answer is relatively simple: because each project brings features, benefits and solutions that the others don't have and a lot of people want to speculate and make fast-easy money over night.
The main sales speech that BSC, ADA, LTC, XRP and others use is: we are fast and our fees are very low. They really want to compete with BTC and ETH to become the digital currency. But here is a huge issue: BTC just reached a US$ 1 trillion market cap in the beginning of 2021. That is not a small achievement. BSC is the 3rd highest market cap today and that is US$ 95 billion. That is less than 10% of BTC.
How long will it take for BSC to reach the US$ 1 T mark? Will it ever reach it? Remember, it competes not only against BTC but also against all the other projects with the same argument. If you want to use BSC or any other of those solutions, you have to get rid of your BTC and/or ETH and buy BSC or any other of those coins that have a better solution. Would you be willing to do that? What happens if the project you chose is not the one that survives?
You know what? I wouldn't bet on any of them. For me, the best thing would be to find a solution that would solve the problems that BTC and ETH. That way, I would keep my BTC and ETH and would be able to buy my coffee for US$ 5, pay virtually US$ 0 in fees and have my transaction confirmed in a few seconds.
If there only existed a solution like that...
Use BTC/ETH paying zero fees and transaction confirmed in a few seconds
BUT WAIT! There is a solution that does exactly this already. It's being implemented by the Tixl Project Team.
Tixl Project implements the Autobahn (this is the name of the German highways, where there is actually no speed limit) Network. All you have to do is drive into it. The name is very good because the analogy is perfect. Once you drive into the Autobahn, you can go as fast as you want. I've seen cars speeding at 250 km/h (that would be something like 160 mph for the people in the US). All you have to do is drive your BTC and ETH into the Autobahn and, once they are there, you can send them to anyone who is there in a matter of seconds at virtually no cost.
That's nice! Hey BTC community: you should all bring your BTC into the Autobahn. Remember those 6.4 billion people that would never use BTC because they simply couldn't? Guess what? Now they can. The potential market for BTC just expanded by 4x. What do you think could happen to the BTC value? Funny. Right now, it just feels like US$ 100,000 for 1 BTC is really not much. And suddenly, US$ 50,000 for ETH also seems totally achievable.
And what project made that possible? Tixl Project. And what is their token? $TXL.
Valued under US$ 0.50 today and a market cap of US$ 20 million, this token is really cheap today. Even if you consider the maximum supply of 600 million tokens that exist (but will not be available so soon - the available supply today is under 50 million tokens), this crypto would still be valued at US$ 300 million.
But how much do you think the token that represents the project that makes BTC and ETH viable for the real world is worth? That's hard to say.
A "valuation" exercise
I'm not a financial advisor. I'm not an economist. I'm not making any kind of recommendation here. I'm just burning my mind with thoughts that I couldn't keep in my head anymore. So if you find this interesting and decide to do something about what I just said, do your own research and know that the risk is all yours.
But, as I mentioned, I have so much going in my head I just had to write it. Just for the sake of a "valuation" exercise, would it be too ridiculous to say that the TXL token, which has a limited supply, could have a market cap that is 1% of the BTC market cap? I don't think so. Keep in mind that TXL is the solution that makes BTC and ETH viable as digital currency, to be used by normal people.
Consider BTC's market cap at US$ 1 trillion. If we can accept that TXL's market cap could be 1% of BTC's, we could say that TXL could be worth US$ 10 billion. I will calculate this considering that all TXL tokens are available in the market: that is almost 70x on today's value!
In 10 years, if BTC reaches 4x more people than today, would it be fair to say that it's price could have gone 4x? I would say yes, in a worst case scenario. But that would mean that TXL could be valued at 280x todays value.
Wouldn't it be nice to have US$ 10.000 in TXL today and discover, 10 years from now that it became US$ 2.8 million? And I think this is conservative. But what do I know?
Get to know the project: visit Tixl.org. Find out more about the project. Here, I just mentioned ONE of their value proposals.
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