A primary characteristic of currency is that it is available for immediate use. (i.e. “current”)

This means that unlike things like stocks, bonds, and derivatives, you can use it immediately to get stuff, and there is no one sitting astride that transaction taking a cut.

It turns out that this is a major problem:

Anyone and everyone’s attention in bitcoin is currently transfixed on a single number: the amount of unconfirmed transactions building up on the bitcoin network.

Earlier on Wednesday, the number surpassed 200,000, an unprecedented level.

Professional bitcoin OTC traders FT Alphaville spoke with see this as an alarming development and one of the drivers of rival cryptocurrency ether’s growing popularity. The views of one trader:

It definitely tempts people into ether. This is the biggest problem with bitcoin, it’s not just that it’s expensive to transact, it’s uncertain to transact. It’s hard to know if you’ve put enough of a fee. So if you significantly over pay to get in, even then it’s not guaranteed. There are a lot of people who don’t know how to set their fees, and it takes hours to confirm transactions. It’s a bad system and no one has any solutions.

Transactions which fail to get the attention of miners sit in limbo until they drop out. But the suspended state leaves payers entirely helpless. They can’t risk resending the transaction, in case the original one does clear eventually. They can’t recall the original one either. Our source says he’s had a significant sized transaction waiting to be settled for two weeks.

………

All of which proves bitcoin is anything but a cheap or competitive system. With great irony, it is turning into a premium service only cost effective for those who can’t — for some reason, ahem — use the official system.

So, Bitcoin has become, as Yves Smith so pithily notes, “Prosecution futures.”

At some point the authorities are going to use the block chain to track money in ways that they never could with cash.