Bitcoin tends to be incredibly volatile compared to other investment options, experiencing significant run-ups in value, followed by quick decreases in value. Despite a recent resurgence, bitcoin has lost nearly half its value after reaching all-time highs in late 2021. While predicting the near-term or even long-term direction of bitcoin is impossible, we believe extreme volatility is likely to continue.
While blockchain holds promise, mainly due to increased security, it has limitations. The main one is it’s difficult to scale a public blockchain. For context, the current limit of transactions per second on the bitcoin blockchain is approximately seven, while Visa's network can process 1,700 transactions per second. The bitcoin blockchain's low number of transactions is due to protocols limiting block sizes to one megabyte and aiming to keep the time between new blocks added to the blockchain to about 10 minutes.
The other limitation is that as mining becomes more difficult and the network becomes more congested, the amount of computing power needed is amplified. These power needs increase the costs of building the appropriate hardware, likely cutting out smaller players. This will concentrate mining (and nodes) in the hands of larger players, limiting the decentralized nature and original premise of blockchain technology.