Next Bitcoin Bull Run Needs to Wait

Imagine you owned a club with low cover charges, cool drinks, and fun people. Your waiters were slow, your managers didn’t have much experience, and your bartenders were a little anti-social, but it was a small club and the patrons liked it.

Then, out of nowhere, your club got hot. REALLY hot. Celebrities, businesses, politicians, everybody started dropping by. People would stand in line for hours just to get in. On top of that, they would pay seemingly anything for a drink. Your club was mobbed. Scammers and scalpers were selling fake entry tickets and bogus wristbands. YouTubers and Instagram stars were posting about promotions you didn’t authorize and hyping events that didn’t exist.

Then you saw the reports on the news and social media:

Too slow. Too expensive. Shady managers. Bad service. Rip off. All hype. This place sucks.

The crowds disappeared and your name was ruined, but your club persisted. In fact, less than two years later, you’re more profitable than ever. Your waitstaff is faster, your managers are better, and your bartenders are more likable. Out of the public’s eye, you’ve worked out deals to lower your costs and found partners with deep pockets who want to help you succeed. While you still have problems, you’re working to fix them.

Lately, you’ve noticed an uptick in new customers. Excitement’s building on YouTube. You hear your club’s name mentioned in the news again.

Is this a sign of things to come? Are you ready for the new rush?

This is cryptocurrency in May 2019.

At the beginning of April, bitcoin hit $5,000 for the first time in many months. As of this post, price is above $6,000. On YouTube, Twitter, and Reddit, people are calling for a bull market.

Bull market?

Please, let’s hope not.

Bitcoin can’t handle the stampede


If we’re heading into a bull market, look out. All those bulls will have to run somewhere, and if they’re running to bitcoin, they’re going to crash into a wall. The network just can’t handle it yet.

Just look what happened during that mini-boom at the beginning of April:

Big jump in fees during the April 1, 2019 pump.

Fees quintupled after a fairly modest bump in the number of transactions and a small jump in price. The kicker is, the total number of transactions didn’t go up that much—only about 20 percent more than on February 28, 2019, when fees were about 20 cents.

Bitcoin transactions from February to April, 2019.

Between the $273 million actual bitcoin volume from exchanges, $5 billion fraudulent volume from exchanges, and private transfers of bitcoin, you have a lot of traffic on a network that was designed to handle 7 transactions per second (compared to Visa’s
average of 2,700—with the ability to kick it up to 50,000 TPS at maximum capacity).

Since 2017, technical improvements have bumped bitcoin’s capacity to 11 TPS but that’s still not enough. Lightning Network could solve the whole problem BUT, as of this post, it can only handle $6.5 million at any one time. Lightning network is growing quickly, but it will be a long time before it gets big enough to matter.

This scalability problem is baked into bitcoin’s programming. It’s not that bitcoin will have scalability problems, it’s that bitcoin does have scalability problems. Those problems will take a long time to fix.

Meanwhile, each small pump sends fees skyrocketing. What do you think will happen during a full-fledged bull run?

If you mess with the bull, you get the horns

It’s not just a problem of scalability, but also a problem with the way bitcoin works. Modern payment systems have evolved to fit human psychology. Bitcoin evolved to fit design specs. This gives it some nasty features that people don’t like. To wit:

It’s slow. Bitcoin transactions take 15 minutes or more to confirm. While you and I know we can trust the transaction to go through, new users get antsy when they don’t get instant confirmation. Uncertainty is terrifying.

Fees are transparent. With bitcoin, the sender pays fees upfront. Outside of wire transfers and remittances, conventional electronic payment systems hide fees from the sender. Only merchants know how much the transaction actually costs. People don’t like paying fees, and with credit cards and payment apps, they don’t have to. Why would they switch?

It’s shady. Did you hear about the exchange that got hacked? The guy who got his bitcoin stolen? Did you know Russians and drug dealers use bitcoin to launder money? Did you see the reports about all those bitcoin crimes? The whole Bitfinex fiasco? That thing with the Minnesota Vikings owner? Everybody else did. Who wants to be associated with that?

For the past few years, developers, entrepreneurs, and regulators have worked to fix some of those problems, but they still have a long way to go. Do you really want to raise bitcoin’s profile before they’re done? Do you really want to remind the “mainstream” about all that mess?

Can’t we wait for the technology and markets to mature a little more? I want people say “OMG this is great” not “WTF is this shit?”

But Mark, alt-coins!

Maybe. Are you sure? Have you ever heard anybody talk about an alt-coin in public?

It’s possible the next bull run will drive some alt-coins into the mainstream. It’s also possible bitcoin will get replaced as the top cryptocurrency. You never know.

That’s the problem—you never know. Most of the alt-coins that promise exceptional speed are still under development. Most of the alt-coins that promise exceptional benefits are hardly used.

Not to mention, nobody knows about them.

Also, how sure are you that they can actually handle real-world usage? They’ve never been put to the test.

Does anybody remember the last bull run, when people had to wait three weeks for a Steemit account? Or when Cryptokitties shut down the Ethereum network? Those platforms had existed for two years before the bull run and still faced serious problems. Some of today’s most exciting alt-coins are still in testing.

Don’t worry, Mark. This next bull run will have institutional investors

You’re banking on these guys to make you rich?

Really? Do you think a few large funds and Twitter personalities putting a tiny bit of money into the markets will propel a new bull run?

No. And even if it did, those guys know when to take their money out of the market. A new bull run will come from retail investors and casual users chasing FOMO, speculation, gambling, and hype. They only know bitcoin. All those alt-coins seem the same to them.

When I talk to normal people about cryptocurrency all the time. To your average person, this is all a blur. Some have heard of bitcoin. Fewer know what it is. Even fewer understand what it does.

You may think the conversation will be:

“Hey Mark, you know about cryptocurrency, right?”


“Should I buy some bitcoin? I hear it’s going up.”

“You could. I suggest everybody own a little. Keep in mind, bitcoin has some problems. People are working to fix those problems, but nobody knows if they will. Other cryptocurrencies get you the same result and they’re faster, cheaper, and easier to use.”

“Oh? Great, Mark. Can you tell me more?”

(My ideal conversation with somebody who doesn’t know about cryptocurrency.)

That conversation is not likely to happen. Here’s how it will probably go:

“Hey Mark, you know about bitcoin, right?”


“Is it actually legal?”


“Do you think it’ll go up?”


“Do you know how to buy it?”


“Oh, cool. Should I buy some?”

“You could. I suggest everybody own a little. Keep in mind, bitcoin has some problems. People are working to fix those problems, but nobody knows if they will. Other cryptocurrencies get you the same result and they’re faster, cheaper, and easier to use.”

“I’m sorry, what? Cryptocurrencies? What are cryptocurrencies?”

(How the conversation really goes.)

These are the people who will be buying when the bull market swings into gear. Do you feel good about using these people’s ignorance to make yourself rich?

Maybe, maybe not. Most people who read this post will not care. Institutional investors certainly won’t. When the market booms, they’ll sell—and with nothing of value to support the prices, everything will collapse, like it did in 2017.

How does this help cryptocurrency’s image? What about all these new blockchain projects that rely on engagement from investors and the general public? What happens when the market collapses again?

But Mark, what about third world countries! Four billion people without banks! Dictators! Fiat! Etc!

Yes. These people will benefit from real solutions and mature cryptocurrency networks.

How does driving up the price of cryptocurrency and getting rich help any of these people live a better life? How will they take advantage of this amazing technology if first-world investors crash the market? Do you think they’re going to risk their financial fate in a boom-or-bust asset with no actual use?

Lighten up, man. Why are you so negative?

I’m not negative. I’m a true believer. I even wrote a book about a country that runs on cryptocurrency. I’m in for the long haul.

I’m also a realist and I’d feel a lot better if I felt cryptocurrency is ready for all the attention it will get when we move into a bull market.

Today, it’s still an unproven, little-used, poorly understood technology. As we saw in the last bull run, price consumes all conversation. Price goes up? It must be legit. Price goes down? It must be a scam. No discussion of anything substantive.

That’s not the way the real world works. In the real world, technology needs to serve a purpose. It needs to fill a need. It needs to have value. Otherwise, it fizzles out. Eventually, the money leaves. The VCs pack up. Wall Street goes away. The public loses interest.

Until cryptocurrency serves a purpose beyond speculation and theoretical usage by strangers in foreign countries, a bull market will change nothing. It will make some people richer, most people poorer, and destroy cryptocurrency’s reputation (possibly forever).

As U.S. President George W. Bush said:

Fool me once? Shame on you. Fool me twice? Shame on me. Fool me three times? You ain’t gonna fool me three times.

George W. Bush was the epitome of the common person.

People might have thought 2017 was a crazy bubble they needed to avoid, but they’ll give crypto a second chance. After all, everybody will be saying “it’s different now, the projects are legit, we have better laws, Wall Street’s involved now, the technology is more mature, etc.”

When the market crashes a second time, do you think people will give it a third try?

Let’s wait until cryptocurrency is ready for the hype before we start another bull market.

Otherwise, we’re just setting ourselves up for another failure—possibly, the last.

Mark Helfman is a cryptocurrency commentator and author of Consensusland, a novel about a country that runs on cryptocurrency.

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