David Bailey is the chief marketing officer at Azteco.
This feature is part of CoinDesk’s “Future of Bitcoin” package published to coincide with the fourth Bitcoin “halving” in April 2024.The halving is a non-event for the vast majority of the world. At its core, it’s a simple evolution in how much the people who process bitcoin transactions get paid. All electronic payments, whether made via credit card, Venmo or the tap of a phone, require some kind of processing.
But the result of the decrease in the block reward has a substantial impact on the second, the network transaction fee. The increase in transaction fees is a stark reminder that the supply of bitcoin is, by design, limited. Once 21 million bitcoins have been issued , there’s no way for anyone to create more bitcoins or alter the supply, as governments often do with their own fiat currencies.
Second, bitcoin is infinitely divisible. As bitcoin gets more valuable, people will transact subdivisions of value . Gold is physical and you can’t subdivide it infinitely as it gets more valuable, thoughThe halving reminds people that the supply of bitcoin is truly limited and that demand is increasing, driving up the price of bitcoin in the long term. As something becomes more valuable, more people will want to use it, and so the cycle continues.
The difference? The Lightning Network’s transaction fee is just a few cents. For regular people – those making small transfers or using a bit of bitcoin to purchase goods and services – this will become the preferred mode of transacting; it’s fast and it’s cheap. The relative ease of transacting with the Lightning Network may also accelerate consumer adoption.On-chain transactions won’t go away, of course.
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