Why 1MB may be the right size for the Bitcoin today?
The opinion is issued by Ariel Deschapell she is a content manager for Ubitquity. Company based in the technology. In this opinion article Deschapell argues that the current capacity of the technology made with bitcoin is few likely to impair the adoption of long-term technology. The solutions should be prioritized, it is clear that Bitcoin is interesting moment, even also. Taking into account the output referendum on EU UK or Brexit, many media and news have recognized the increasingly credible role of bitcoin as a safe haven of assets.
Institutional investors such as Daniel Masters have begun to indicate that they could be ready for being in that market capitalization which is about 10 billion dollars after recent gains. As well the price and investment prospects continue improving. Therefore a question hangs in the digital currency and the decentralized network. Can it scale of transactions? In its current development path is not believed.
The technology behind Bitcoin is called Blockchain. Blocks are containing online transactions on the network. Approximately each 10 minutes each block is confirmed. Currently each block contains a limit of 1 MB of information.
What is the problem?
The average block size is the trend very close to the limit and some blocks have already arrived. Its results are that transactions, pushed the next block. Therefore there are periods of time in which confirmation delays. Higher transaction fees tend to create a feeling of anxiety as result of the previously noted. It is like climbing bitcoin which is proposed is to give more division in the space of time.
What do the experts think?
Bitcoin Core developers have a plan. Instead some believe that more immediate action is necessary. The following months will be crucial to adopt an approach. It is important to explore if it is necessary an inmediat action for the continued success of Bitcoin.
How should Bitcoin grow?
The dream of those who believe in Bitcoin cryptocurrency is to determine the overall mosaic of sovereign fiat currencies and be the means to carry out all transactions. These are noble motives, and even have the opportunity to reach them. Bitcoin has to solve it`s very real technical limitations first. While it is a sound of an inelastic currency, the truth is that the attached network payments cannot support today even a fraction of a fraction of global transactions in actuality. Take only the Visa network as an example it affected 47,000 transactions per second at peak time during the year 2013 in the holidays. Compared with this single centralized payment process power bitcoin protocol can only handle a handful of transactions per second. It is clear that to achieve its ambitious goals bitcoin needs to improve its performance in transactions in an order of wide magnitude. The easiest way to increase this number is by lifting the current top on the 1MB block size. It is also the worst way to do it.
How to solve the problem of the block size?
To start this response is taken into account the views of Joseph Poon and Tadge Dryja they wrote in their white paper on pay channels bitcoin “If we use an average of 300 bytes per transaction bitcoin and if it is assumed a limited block size an equivalent to the peak of 47,000 Visa transactions capacity per second it would be almost 8 GB per bitcoin block. Every 10 minutes on average if it is taken continuously it would be more than 400 terabytes of data per year.” These dramatic numbers tell us that the increasing of the size of the block alone is a mistake. This cannot be a long-term plan for the expansion of bitcoin.
What can happen?
Any increase in centralization creates greater pressure on the backbone of the network therefore in mining and nodes. Without a robust distributed network. Bitcoin is more vulnerable to censorship and attack. To put it another way; to increase the block size you have to make a conscious compromise between decentralization and performance. However decentralization of bitcoin is their only biggest feature that supports its immutability and resistance to censorship. Without these features Bitcoin is reduced to simply be a very cumbersome and costly PayPal. Therefore if bitcoin can be scaled without sacrificing some degree of decentralization this is clearly the path to be taken.
What is the solution?
By the previously mentioned, long term solutions are required to address the heart of the problem. The network as it is can not grow effectively therefore how the network needs to be optimized how it works. Optimization comes from improvements Segregated Witness. Which speeds processing operations block and increases efficiency without increasing the block size, also, the SegWit attribute, also lays the groundwork for future upgrades that would be added to bitcoin properly, to dramatically increase performance in transactions.
What other items can be handled?
It’s about concepts such as Red and side chains, sidechains Lightning Network and these can be read in more detail in other links.
Does it damage to take the top of 1MB?
Segregated Witness is proved and several implementations of higher level protocols in its development undergoes receiving full attention.
You can see the general argument this way: as the blocks are near the time of transaction responsiveness is slow and rates can increase. These problems mean less solution. And not attending means a hesitant bitcoin and the effect on the network is that it can die.
Therefore a Hardfork is needed to increase the size of the block at least 2MB as an immediate increase capacity while long-term solutions are developed. However increasing the size of the block, even minimally a period of time.
What to do In this regard?
To promote a hardfork it must be shown that the blocks have reached the limit of 1MB and are in fact significantly hindering a solution in the short/medium term. So far this has not been done. Therefore the average full blocks mean higher fees if such fees are not paid then confirmation times are slower on the network. As a believer of bitcoin it is easy to see how this could be a difficult decision to take. A costumer, who uses bitcoin for the first time with a delay in severe operation waiting for confirmation of a transaction, may well be disconnected from the technology with great anger because it works as advertiser in these types of small transactions the impact of delays is disproportionately.
How is Bitcoin now?
Bitcoin is years far from being easy enough for the costumer as a means to acquire from your phone and use it as a serious alternative similar to Apple Pay or even Venno. The truth is that today Bitcoin is already absolutely terrible for those use cases. That is just what is affecting the current growth.
The reason is simple but powerful : the volatility. For daily spending, any average consumer in their right mind will buy, with a highly fluctuating currency when a much more stable and accepted is close at hand. Another thing to consider is that the media report on price growth currently taking bitcoin , it is certainly a vehicle for investment and speculation, this operation is reflected significantly in investors few amounts of coins it means that is just an atractive.
What the statistics say?
The statement in relation to small investors, are reflected in the numbers available in Tradeblock it shows that the average bitcoin transactions between 27 May and 25 June this year was around 12 to 14 BTC in each transaction much larger than any retail purchase conceivable. Undoubtedly Bitcoin does not need to compete and beat transactions with credit and fiat money almost stable purchasing power which are made instantly just what you have to overcome are the traditional financial transactions which in some cases take between 3 to 5 business days for effectiveness coupled with high collection rates by banks likewise match yields assets presented somewhere else.
Future for cryptocurrency
Bitcoin is becoming in one of the most proven and sought investment instruments. Therefore its market capitalization grows. It is clear that volatility should decrease gradually is the most suitable as use for average consumers.
Another thing to consider when micro transactions are reliable fast, and cheap, can become characteristics for growth this will not happen in the coming months will not happen in a short time applications on the network have successfully deployed we need further that development. Bitcoin true believers are convinced it will be a long way to achieve the true objectives. The masses still not going to drive the growth of Bitcoin investors and speculators continue making it heavy elevation the system will continue to work for them even with blocks in its most complete saturation phase. Eventually the block size will increase over time but this is only a small part of the equation on a large scale. Therefore Hardforking not now give us an illusion in the form of progress bitcoin developers have added problems and have to deal with. Therefore the scalability of Bitcoin is not an easy solution the solution is slow, be creative aimed at the development you want to address. While this stage is discussed there is little reason and no evidence that the adoption be seen immediately affected by a continuous 1MB.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not be attributed to, Infocoin.