Marion Laboure, a Deutsche Bank analyst, wrote that Bitcoin must overcome extreme volatility and high transaction costs before it can become a more widespread payment option.
Laboure pointed out that Bitcoin can process seven transactions per second (600,000 per day), while Visa can handle over 24,000 transactions per minute, or more than two billion transactions per hour.
The Lightning Network could prove to be promising in this regard, Laboure wrote. It aims to increase Bitcoin’s scalability through speeding up transactions and lowering costs. According to Deutsche, Lightning Network claims that it can process 25,000,000 transactions per second at four cents per transaction. This means it is 1,000 times faster than Visa and charges lower fees. However, Mastercard and Visa have transaction volumes that are far greater than the Lightning Network.
Laboure stated that even if the Lightning Network surpasses $100 billion per year in transaction volume by 2020, it will still be less then 1% of Visa’s annual payment transactions.
Laboure said that Bitcoin’s acceptance and use as a payment option will require “significant regulatory involvement”.
Deutsche Bank stated that the Taproot update improves Bitcoin’s scalability, but Laboure believes third-party developers initiatives like the Lightning Network will play a greater role in Bitcoin’s adoption as payment method.
Square, a payment services provider, stated on its website that Cash app customers will be able send bitcoin to Taproot enabled wallets by December 1st as it tries to verify its activation. Taproot upgrades should provide Cash App customers with better privacy features, lower transaction fees, and smart contracts.