Bitcoin: Despite Headwinds, The Merchant Solution Is Evident

SummaryThe "blockchain trilemma" explains the scalability problem plaguing Bitcoin and many other public blockchains.Bitcoin's answer to the scalability issue is the Lightning Network - a layer 2 solution built on Bitcoin's base layer.Lightning Network adoption is small but growing based on increased BTC capacity. Base layer activity remains strong.Network activity aside, the real driver of BTC price is monetary policy.When I last covered Bitcoin (BTC-USD) in early July, I made the argument that bearish Bitcoin had become a one-sided trade. While Bitcoin is lower now than it was at the time of that article, bulls did get a relief rally that took the coin from $21k at time of writing to $25k within a few weeks. Sentiment is once again bearish, this time though I don't see the same contrarian opportunity. This article will instead focus on the technical drawbacks of Bitcoin, the Lightning Network and its activity, and the broad macro headwinds currently facing all risk markets.Network DrawbacksOne of the big technical flaws on Bitcoin's base layer is the lack of scalability. While Visa (V) can reportedly process tens of thousands of transactions per second (or TPS), Bitcoin can handle less than 10. This, rightfully, leads many to be highly skeptical of Bitcoin's theoretical mass adoption as a peer to peer payment network. It is also a big reason why there has been a proliferation of other blockchains that aim for better scalabil...