Sending bitcoin onchain remains a poor payment experience despite the hype surrounding the leading crypto asset, according to Taproot Wizards founder Udi Wertheimer. In a recent post-mortem of a high-volume sale using bitcoin, Wertheimer detailed several pain points with onchain payments including long confirmation times, lack of payment amount enforcement, high fees, and insufficient Lightning Network capacity.
Bitcoin Payments Remain Clunky
During Taproot Wizards’ (TW) recent Quantum Cats sale, the company processed over $15 million worth of bitcoin (BTC) payments onchain. However, TW also had to process over $1 million in refunds due to inefficiencies with the Bitcoin network as a payment protocol. Udi Wertheimer explained that unconfirmed transactions required manual review to mitigate fraud risk, a labor-intensive process not feasible for most merchants.
Overpayments had to be manually reconciled to prevent buyers from purchasing more than their allotted amount, another time-consuming manual process Wertheimer detailed. Onchain fees also proved problematic as buyers competed to get their transactions confirmed quickly during the high-demand sale.
While Lightning Network provides a scaling solution, Wertheimer argued the network lacks capacity for high-volume transactions like TW’s sale. He estimated that the startup would have required locking up 25% or more of the entire Lightning Network’s capacity for their Quantum Cats sale, which was infeasible.
“We insisted on using only BTC for our sale even though it was hard, and even though our customers begged us to accept other currencies,” Wertheimer wrote. “If we care about bitcoin’s success, we need to be honest with ourselves: bitcoin is a BAD payment solution right now.”
Despite the challenges, Wertheimer remains optimistic about Bitcoin’s future. “We’re gonna continue to push this forward and come up with innovative solutions,” he concluded. He advocated bringing back Bitcoin’s OP_CAT function to build better payment layers on top of Bitcoin.
Bitcoin’s OP_CAT function is an opcode in Bitcoin’s scripting language that was used for concatenating two strings of bytes. Bitcoin’s scripting language allows for the creation of various types of transactions that go beyond simple transfers of BTC from one party to another.
While the technology holds transformative potential, its current limitations in handling transactions efficiently highlight a critical juncture. The path forward demands innovation, collaboration, and a steadfast commitment to enhancing Bitcoin’s infrastructure to realize its full promise as a seamless, universally accepted digital currency.
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