Bitcoin 'virtually unusable' as currency

Emil Oldenburg did not reveal how much he made from bitcoin. Photo / via Twitter

Bitcoin entrepreneur Emil Oldenburg is getting out.

In an interview with Swedish website Breakit, the co-founder and chief technology officer of Bitcoin.com — which offers various services including mining, currency exchange and wallet storage — warned very high fees and long transaction waiting times had made bitcoin "virtually unusable" as a currency.

"An investment in bitcoin right now I would say is the most risky investment you can make. It is an extremely high risk. I've actually sold all my bitcoins recently and switched to bitcoin cash," he said, referring to the bitcoin 'fork' designed to allow for faster, cheaper transactions.

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Oldenburg did not reveal how much he made, but said several of the Tokyo-based company's employees had become major winners. "We pay all our 60 employees in bitcoins," he said. "All my salary over the last three years has been in bitcoin."

Bitcoin has skyrocketed in value by more than 1900 per cent this year to test US$20,000, but the massive influx of users has put strain on the network, which can only process a limited number of transactions per second.

Users who volunteer higher fees to the "miners" — the computers which continually work together to verify and add to the blockchain — have a greater likelihood of having their transaction processed in the next "block".

As a result, the average cost to complete a transaction has skyrocketed in recent weeks, from around US$6 to US$26. "It costs a lot to transfer bitcoins to and from the stock exchanges," Oldenburg said. "When I sold my bitcoin I had to pay US$50 and wait 12 hours for the transaction to go through because of this. It's completely unreasonable."

The bitcoin community has been bitterly split on the issue of technology upgrades which would potentially speed up the network. That divide led to the creation in August this year of bitcoin cash, which Oldenburg and his business partner, Bitcoin.com chief executive Roger Ver, have been aggressively promoting.

"It's a group of fanatic bitcoin Talibans who themselves do not use bitcoin everyday [who] want it like this," Oldenburg said.

"They see bitcoin like digital gold and a technical experiment, not something you should actually use. It will never be a currency used in everyday life or for people who run companies.

"We have actually stopped developing new services for the old bitcoin network now and focus mostly on bitcoin cash. There it only costs 10 öre ($0.02) to send and no waiting times. The only [downside] is that bigger hard drives are required, but it's not a problem for most."

Oldenburg said despite the massive influx of investors pushing up the price of bitcoin, the vast majority had not experienced the low user-friendliness, high fees and long wait times — because most had only bought bitcoin, but never sold or traded the currency.

"As soon as people realise that this is how it works, [they] will start selling," he said. "The old bitcoin network is virtually unusable."

He added didn't think bitcoin would be the "world currency" as some had predicted. "No, I do not think so," he said. "Not as long as the network is controlled by this group as I mentioned. It's at bitcoin cash that the solutions are there, that's where I see a future."