Bitcoin.com is one of the world’s largest bitcoin sites, having grown its profile thanks to the insane price surge of the cryptocurrency this year. But its cofounder and CTO, Emil Oldenburg, a Swedish native, is extremely skeptical of 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.
“I have in fact sold all my bitcoins recently and switched to bitcoin cash,” says Oldenburg, referring to the problems with bitcoin’s 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. Bitcoin.com operates in everything that has to do with bitcoins.
Today, the site –based out of Tokyo but registered on S:t Kitts – has tens of millions of unique monthly visitors, according to Similarweb, a web analytics site. The company’s biggest single revenue stream is its so called bitcoin “mining pool”, where it forges new units of the cryptocurrency that are released on the market.
Oldenburg doesn’t want to disclose any revenue numbers, more than revealing “it’s an awfully lot of money,” he says to Breakit. Even on a personal level.
“All my salary in the past three years has come in bitcoin,” just as those of his 60 colleagues in Tokyo, Oldenburg says. But according to the Swedish bitcoin expert, it’s time to change to bitcoin cash.
There’s a big reason for that switch, and it’s all about the market liquidity — or lack thereof — of bitcoin.
The reason why people haven’t understood the risks inherent in owning bitcoins, according to Oldenburg, is simply 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 tells Breakit.
“The old bitcoin network is as good as unusable.”
While buying, selling or trading in bitcoins is not an issue today, according to Oldenburg, the problems surface when bitcoin transactions are recorded on the blockchain, the digital ledger that records each transaction.
The problem centers on the limited amount of transactions per second you can make in the bitcoin network, which in turn depends on the formation of the memory “block size” that store the transactions. This, according to Oldenburg, makes for a very illiquid and unusable cryptocurrency.
It is a controversial issue right now that the amount of bitcoin trades you can make per second is limited. This in turn leads to high transaction costs and long transaction lead times, which seem to be increasing as new investors are crowding the market in chase of quick returns.
Even though these major problems and “up to 12-hour transaction lead times” could be addressed, Oldenburg sees no signs of change, because its run by the “old” bitcoin network, 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.”
In what may be considered somewhat ironic, Oldenburg says bitcoin.com is distancing itself from bitcoin and has even stopped developing services for it — to mostly focus on bitcoin cash, the currency that split from bitcoin back in August, and recently overtook Ethereum as the world’s second-largest cryptocurrency.
“It only costs $0.012 (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 refers to the bigger block size limit of Bitcoin Cash, currently 8Mb — as opposed to bitcoin’s 1Mb — which leads to lower transaction fees.
All in all, he doesn’t believe bitcoin will be the currency for everyday use the world is 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.”