Bitcoin, the digital currency that took the world by storm less than a decade ago, captivated the imagination and still does. From the advent of the Internet, people had dreamed of the day they could create a digital currency; one that never left the computer was convenient and untraceable. But, like with any currency, there are bound to be problems that arise. For Bitcoin, however, these problems are different than those faced by traditional currencies.
Bitcoin capacity limitations and scalability implications
The use of bitcoin as currency is relatively new and is still a subject of much debate. With bitcoin’s first known use in 2009, we are far from having made any major improvements to the cryptocurrency’s technological aspects, despite some technical innovations. However, a major characteristic of bitcoin is its decentralized nature. Bitcoin is a cryptocurrency that relies on the blockchain. A blockchain is a list of records, called blocks, which are used to track all transactions ever conducted on the bitcoin network. Bitcoin allows people to exchange money without having to trust that the currency of their choice is backing it in the event they need to purchase something or pay someone. In this sense it can be considered a type of decentralized currency, with no central authorities regulating the coin’s supply. So, to put in simplified terms, this means money creation in the form of bitcoin is decentralized.
While the currency is decentralized it is not completely independent or self managing. There are aspects to this design which could cause problems in practice which need to be addressed. One issue concerns the speed with which bitcoin transactions can take place. In order to take full advantage of the potential of bitcoin, it needs to be easy to send and receive funds across the bitcoin network. One of bitcoin’s advantages over other digital currencies is that the same bitcoin can only ever be spent once for something. This is important in the sense that the bitcoin cannot be wasted, thus increasing its capacity for economic redistribution to a maximum. The bitcoin price is currently determined by the difficulty of the Bitcoin mining process. As block sizes increase (which would be very quickly in the case of a successful hard fork) the difficulty of processing bitcoins will also increase, and as a result the price will rise. If the difficulty increases in a manner that makes it impossible to create blocks quickly enough to keep bitcoin at a price which
Increased transaction times
According to users, before, a transaction took about 10 minutes to be confirmed. Now, a single transaction is taking over 40 minutes to be completed- a fact that is making Bitcoin-accepting stores drop it as an acceptable payment method.
The reason for the added time to process a transaction is due to the fact that the Bitcoins have to be “mined” before they can be used, a process which takes about 10 minutes and provides only 1MB worth of data- while many transactions require much more. To solve this problem, it has been suggested changing block sizes from 1MB to 2MB, allowing for the transactions to happen quicker, and giving miners access to more data faster.
Unfortunately, this is where the debate really lies. Those who want to increase the block size are looking to change the Core, the original Bitcoin script, to allow for these bigger blocks. But, they also want to provide an open source code that would allow other people to begin easily mining. Others, however, are against the idea of changing anything concerning the Core of Bitcoin codes.
Decentralized decision making
The vote on what to do is open to the public, but it is the miners that will be controlling the software in the end. But, like with any situation requiring people to vote, each side is being accused of using dirty and aggressive tactics to come out on top. While this debate continues, many Bitcoin users are finding it difficult to continue using the currency, and it will continue to be difficult until changes are finally made.
The longer Bitcoin continues as it is right now, the harder it will be for them to make a comeback. People already are having to abandon Bitcoin as a method of paying, at least temporarily. Shops are no longer as open to accepting Bitcoin as they once were, now that it looking like an unreliable payment form. Once changes start getting made, and a new way to handle the massive amounts of transactions is decided, then Bitcoin will be able to show that they are still in the game.
