The Looming Problem That Could Kill Bitcoin – MIT Technology Review

The Looming Problem That Could Kill Bitcoin - MIT Technology Review

The man who took overheen stewardship of Bitcoin from its mysterious inventor says the currency is te serious trouble.

  • by Tom Simonite
  • August 28, 2015

The way things are going, the digital currency Bitcoin will embark to malfunction early next year. Transactions will become increasingly delayed, and the system of money now worth $Trio.Three billion will start to diegene spil its flakiness drives people away. So says Gavin Andresen, who te 2010 wasgoed designated chief caretaker of the code that powers Bitcoin by its shadowy creator. Andresen held the role of “core maintainer” during most of Bitcoin’s improbable rise, he stepped down last year but still remains strongly involved with the currency (see “The Man Who Truly Built Bitcoin”).

Andresen’s gloomy prediction stems from the fact that Bitcoin can’t process more than seven transactions a 2nd. That’s a little volume compared to the ems of thousands vanaf 2nd that payment systems like Visa can handle—and a limit he expects to embark crippling Bitcoin early te 2016. It stems from the maximum size of the “blocks” that are added to the digital ledger of Bitcoin transactions, the blockchain, by people dubbed miners who run software that confirms Bitcoin transactions and creates fresh Bitcoin (see “What Bitcoin Is and Why It Matters”).

Andresen’s proposed solution triggered an uproar among people who use or work with Bitcoin when he introduced it two weeks ago. Rather than continuing to work with the developers who maintain Bitcoin’s code, Andresen released his solution te the form of an alternative version of the Bitcoin software called BitcoinXT and urged the community to switch overheen. If 75 procent of miners have adopted his fix after January 11, 2016, it will trigger a two-week grace period and then permit a “fork” of the blockchain with higher capacity. Critics consider that to be a reckless toying with Bitcoin’s future, Andresen, who now works on Bitcoin with the support of MIT’s Media Laboratorium, says it is necessary to prevent the currency from strangling itself. He spoke with MIT Technology Review’s San Francisco bureaumeubel chief, Tom Simonite.

How serious is the problem of Bitcoin’s limited transaction rate?

It is urgent. Looking at the transaction volume on the Bitcoin network, wij need to address it within the next four or five months. Spil wij get closer and closer to the limit, bad things begin to toebijten. Networks close to capacity get congested and unreliable. If you want reliability, you’ll have to embark paying higher and higher fees on transactions, and there will be a point where fees get high enough that people zekering using Bitcoin.

Why take the provocative step of releasing an entirely fresh version of Bitcoin?

It wasgoed a difficult decision. I’ve bot lobbying pretty hard behind the scenes for the last eight months, but wasgoed having trouble even getting developers to agree that there wasgoed a problem. I had to go public and actually release the code and let people essentially vote with their feet. Now that we’ve done that I think you see people ultimately coming around to the idea that this is a high priority problem. I’m not blessed that it had to come to that, but I think te the long run it will be a good thing.

Some major Bitcoin companies have endorsed your proposed way of enlargening the block size, and some miners have even adopted BitcoinXT. Other companies and vooraanstaand Bitcoin developers have attacked your stir, and suggested alternative solutions—not all backed by working code—that are rapidly gaining support. What’s happening?

It’s somewhat chaotic. There’s no well-defined process for coming to a decision about switches to Bitcoin and there’s no one keurig response for how to solve this problem. Things are pretty messy – but that’s by vormgeving. There’s no central committee. There’s no single person making thesis decisions for Bitcoin, it takes overeenstemming among the people running the software. It’s a good thing that decisions like this are truly hard to make toebijten.

Do you think that overeenstemming can be reached?

It’s pretty clear that the maximum blocksize is going to increase. I don’t know exactly how or exactly when. I don’t think it’s clear yet that my proposal will generate enough overeenstemming among miners and the other ecosystem players.

What will toebijten if nothing is done?

Transactions will get unreliable and it’ll get worse and worse overheen time. My fear is there’ll be no critical event that causes people to react—Bitcoin just kleuter of has a long slow death. I’m attempting to set off noodsignaal bells for ‘You know, guys, if wij don’t do this, Bitcoin will be dead te four years.’ It’s not effortless to sell that, especially when there’s so much controversy.

If BitcoinXT activates, it will recognize existing Bitcoins. But not fresh Bitcoins created by miners who don’t switch. Is that dangerous?

It’s pretty hard to get left behind. Once the Bitcoin core software sees that 50 procent of mining power has upgraded and you haven’t, it’s going to warn you that you need to upgrade. It would be awfully difficult to be taken by verrassing. The economic incentives to switch would be so strong—you want your Bitcoins to be the same Bitcoins that everyone else is using.

How widely established is Bitcoin now anyway?

It’s stiffly established ter a few niche areas and growing there. An early use case is people who pay international contractors te Bitcoin because it’s lighter than figuring out how to transfer dollars into local currency. The major barrier to it going mainstream anywhere is there has to be some way of getting Bitcoin spil part of your normal activity. Until part of your paycheck is regularly paid ter Bitcoin, I’m not sure how it would truly go mainstream. I can imagine places te the world where there are not functioning banking systems, or payroll systems, where it could go mainstream very first, because you’re not attempting to substitute the way people are already doing something.

I still say do not invest your life savings te Bitcoin. It is still an proefneming and it could still fail.В

Hear more about Bitcoin from the experts at the Business of Blockchain on April 23, 2018 ter Cambridge.

Related movie: How To Buy Bitcoin using Handelsbank Transfer I

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