Bitcoin in Crisis
This can be seen on the following graph for the last 12 months. The curve does not go down to zero anymore. It can no longer keep with the demand of blockchain space to store newly created transactions. As a result there is a permanent huge backlog of payments which are simply no longer executed in any reasonable way.
One year ago the norm would be to have just a few thousands of unconfirmed transactions waiting for being mined. Knowing that one block adds some 1000-2000 transactions in 10 minutes, this would mean that you wait for maybe 1 hour for an ordinary transaction to be mined, and that one could reasonably expect it to be mined sooner or later.
Now the situation became MUCH worse: the number of unconfirmed transactions has skyrocketed to 100,000 [later 170,000]. At the same time we still have a strict 1Mb limit on block size because the bitcoin network inability to deliver any sort of sensible reform or upgrade. This means that many users of bitcoin need to wait for DAYS and even WEEKS before their transaction is approved.
Some detailed statistics on waiting time vs. fee: see Fig. 8 on page 13 of this paper written by a UCL researchers Pappalardo et al. Here is a real-life tool which shows how big are the fees used in unconfirmed transactions for the last 24 hours. And here is an example of a transaction not mined for many days from 8 May and even erased/forgotten by blockchain.info(it was there before). In fact something like 20% of bitcoin transactions are NOT mined for 30 days or more, cf. again UCL paper.
As the demand cannot be met, fees paid to miners went to the moon as shown on the graph below.
Bitcoin has become a network where economic activity is taxed and a lot of small transaction will not happen at all. Now it is not true that the relative cost of processing compared to the transaction volume has increased, it went down to 0.5%, see this graph. It is rather correct to say that the network can now only handle larger payments for the super wealthy and large transactions are executed, cf. Fig. 7 in UCL paper.
Alternatives are to put an exorbitant fee for your transaction to be mined ASAP (within 10 minutes), or to replace your transaction and increase the fee – many apps do not allow this and people see their bitcoins stuck in a limbo for days and possibly forever. For ordinary users this means losing their bitcoins – in practice – for example most ordinary users of many mobile apps will not know how to recover their bitcoins from a backup of their private keys and app developers typically do not explain how to do it.
If bitcoin loses in dominance who are the winners? This curve shows that in recent 4 years, bitcoin dominance is eroded, clearly, coincided with an appreciation of one single currency, first Ripple, then Ethereum, and recently both at the same time.