Riot, Blockware Solutions Explain How Bitcoin Becomes Medium-of-Exchange: Report

This report examines the steps needed to bring Bitcoin transactions to 7 Billion people. It also outlines the future outlook for the industry over the next 20 year.

Riot Blockchain Inc., a Bitcoin mining company, and Blockware Solutions, an on-chain analytics firm have published a report that details the future scalability for Bitcoin transaction fees. This release was sent to Bitcoin Magazine.

According to the report, an average transaction size for an individual is 1-5 Bitcoin transactions per calendar year. This would increase to 1-5 transactions per hour if Bitcoin was to be a medium-of exchange.

This transactional increase, with an estimated seven billion bitcoin users, would require that the network increase its throughput to 79.843.75x its current capacity. According to the report, as transactions grow around the globe, more people will turn to third-layer and second-layer scaling solutions like Fedimint or the Lightning Network.

Scaling solutions won't be available immediately, however. Accordingly, the report reveals that there will be a period with high on-chain fees over the next 20 years which will encourage further scaling solutions.

As block subsidies fall and on-chain fees rise, miners will look more to transaction fees as a source of revenue. Research shows that miners can expect to earn more revenue from transaction fees over subsidies between 2032 and 2048.

The report also details three attack vectors, including non-economic and economic attacks. It compares them to Bitcoin's antifragility and increasing transaction fees which increase attack costs.

The report concluded that while it is impossible to know the future, it is safe to assume that Bitcoin's "security" will last for the long term. Miners will likely experience more scaling cycles in which they can earn significant transaction fees as Bitcoin adoption increases and its use as a medium-sized exchange starts.

By: Shawn Amick
Title: Riot, Blockware Solutions Explain How Bitcoin Becomes Medium-of-Exchange: Report
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Published Date: Tue, 20 Sep 2022 14:00:00 GMT

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