A number of critics have claimed Bitcoin is "terrible" as a payments system.
The Bitcoin network could come under huge strain when El Salvador adopts the cryptocurrency as legal tender, JPMorgan has warned.
Analysts at the U.S. investment bank said BTC trading volumes currently stand at about $40 billion to $50 billion a day.
Although this may seem high, daily value transfers using cash are much, much higher — and most Bitcoin is illiquid, meaning that it’s been locked away and isn’t being circulated.
According to Bloomberg, the JPMorgan report said:
“Daily payment activity in El Salvador would represent ~4% of recent on-chain transaction volume and more than 1% of the total value of tokens which have been transferred between wallets in the past year.”
All of this could put a strain on the Bitcoin network, with the report adding that the cryptocurrency’s illiquidity is “potentially a significant limitation on its potential as a medium of exchange.”
There has been no shortage of critics who have lined up to say that Bitcoin is impractical for use as a means of payment. William Quigley, the co-founder of the Tether stablecoin, recently said:
“Bitcoin is the worst payment system ever invented. It’s terrible. Almost any token is better than Bitcoin as a payment system.”
And in a recent episode of the CoinMarketRecap podcast, law professor Rohan Grey said:
“I think Bitcoin has got a lot of problems as both a currency and settlement payment system. I think the particular context and broader dynamics around this particular announcement and the way it’s been approached are not great as well.”
Last week, a survey suggested that more than 75% of Salvadorans are skeptical about President Nayib Bukele’s plans — and very few of them would be willing to be paid in cryptocurrency.