Others here are touching on Bitcoin being like the "1.0" of cryptocurrency, but it's actually a lot more than that. In the public eye, it's a symbol of what cryptocurrencies can be.

You're suggesting Bitcoin just proved it can't scale, but it actually just proved it did--just not with transaction volume. The network continued to process transactions averaging one block every ten minutes exactly as it was built to do, despite the heavy load.

To put it differently: A different online payment system could have stopped accepting transactions, or run out of resources, allow transactions it shouldn't have, disallow ones it should, or something else terrible. But Bitcoin didn't. If you wanted into the next block, you'd need to pay more, but that's (from a technical perspective) entirely by design.

What Bitcoin is proving is that it has clear and well-understood limits and continues to work well within them, and that's incredibly important for public perception. IMO, if Bitcoin's transaction capacity never scales, it'll still be a huge technological success. Other cryptocurrencies can try their hand at scaling, but Bitcoin needs to be rock solid to the extent possible for all cryptocurrencies' sake.

IMHO (because to claim to "know" anything about how this is all going to turn out is to be a fraud), Bitcoin is the proof of concept for this whole crypto thing.

It was the first. It was the genesis idea. But good lord, do we think it's the actual solution? What would be the odds?

I imagine that Bitcoin will play its part as the public face of the blockchain revolution, but something else - or many other somethings - will be the successors that we actually use in the future. (Pick your own alt-coin as the successor; good luck.)

If I had a large holding in Bitcoin now I would be cashing out or I'd be nervous. I'm not saying it won't go higher, I'm saying that at some point its demise is inevitable. Might be quick, might be slow, but it'll happen because Bitcoin is not the technically best solution in this incredibly exciting field. It's not even close.

As engineers and technologists we must always be mindful of our impact on the planet. Bitcoin has been a disaster when it comes to environmental concerns. It is a shadow on techs efforts to lead the way toward a sustainable future.

We need to figure out a way to solve this issue, especially if cryptocurrency utilization is to increase, in particular through Bitcoin:

Bitcoin uses about 32 terawatts of energy every year, enough to power about three million U.S. households, according to the Bitcoin Energy Consumption Index published by Digiconomist, a website focused on digital currencies.

By comparison, processing the billions of Visa (V) transactions that take place each year consumes the same amount of power as just 50,000 American homes, according to Digiconomist.

You are both right and wrong.

There have been multiple attempts at scaling Bitcoin on-chain by raising the blocksize. They have all been unsuccessful because they have been blocked by the Core developers and their supporters using censorship, troll campaigns, ddos and abuse. It's not due to technical reasons but because they want to redirect scaling off-chain, using technology they coveniently develop. The very same developers actually supported bigger blocks a couple of years ago but changed their tone to support the scaling approach their company favors. After the last attempt (Segwit2x) it's clear Bitcoin won't scale on-chain.

However the technical limits of the technology ha never been reached, tested or even been fully researched. Bitcoin Cash is for example a fork which aims to scale on-chain by increasing the block size. If all transactions from Bitcoin would be done on Bitcoin Cash the network would work fine today.

Where the actual limit is we don't know. It's probably not possible to support every financial transaction for everyone. For that we do need off-chain scaling in addition to many other improvements.

People now envision bitcoin as 'store of value', and less like an actual currency. I imagine there are many technical and financial reasons why it will never be suitable as a currency. (Deflationary by design, technical limitations on size of blocks leading to slowness of transactions)

Does being unsuitable as a currency mean it's also unsuitable as a 'store of value'? The answer to that isn't obvious to me.

The value of the US dollar comes in part from our ability to pay taxes with it (and perhaps ultimately from the US military). Cryptocurrency has no central authority to enforce its value via taxes or military, and isn't particularly suitable for day-to-day transactions. Without either of those properties, I have a hard to imagining it being a particularly good store of value. But we'll see. I think we're all watching an interesting experiment unfold in real time.

I don't think the current price of btc has anything to do with whatever utility it may or may not have as a currency or store of value. The price is entirely informed by speculators hoping to sell it the following day for 100% ROI. I think a collapse is inevitable.

Two popular refrains on scaling:

a. Block size - This was increased in bitcoin cash. What many people are not aware of is the paper 'Information propagation in the bitcoin network' by Decker and Wattenhofer in 2013. The average time for a block to be seen by a node is ~13 secs. As per the paper:

"For blocks, whose size is larger than 20kB, each kilobyte costs an additional 80ms delay until a majority knows about the block." -'Information propagation in the bitcoin network.

So, increasing the block without increasing the block time actually increases chances of double spending. But, increasing block time is well simply delaying the payments.

b. Lightning network - Off-chain transactions. Fascinating idea. The problem is it goes to a form of centralization. And if things hold the companies running these channels will invariably meddle in some transactions. But the stated goal of bitcoin was -

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments. While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model. Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party

> How is this expected to work with 7 billion people using it for every tiny financial transaction?

https://lightning.network/

tl;dr: a network of off-chain, transitive payment channels. two on-chain transactions (to fund and settle channel) allow for ~unlimited, ~free, ~instant transactions across a p2p network of nodes off-chain

“A Fast and Scalable Payment Network with Bitcoin Duplex Micropayment Channels”

https://www.tik.ee.ethz.ch/file/716b955c130e6c703fac336ea17b...

Obviously no, the current version of Bitcoin does not scale.

I don't see why you think that means Bitcoin _can't_ scale though. In order to convincingly make that claim, you'd need to be able to prove that all existing proposed solutions for scaling the network (lightning, block size increases, etc) cannot possibly work.

Off Topic: Is anyone else creeped out by having an open ledger? As soon as I transact with someone or an entity, they now have access to view my wallet's holding/transactions via pub key. I don't know how I feel about Overstock having that information.

The piece you are missing is that this problem is a direct result of the Core dev teams deliberate choice not to scale. They have a strangle hold on development and vehemently opposed any proposal to scale through block size increases as was the original intent.

Bitcoin Cash isn't having these problems and won't have these problems in the future. Many people aren't aware of the underlying issues driving the transaction backlog in part because the historically important forums where Bitcoin is discussed have suppressed any discussion of this issue for a couple years now.

https://www.yours.org/content/a-roadmap-for-scaling-bitcoin-...

That's why I tell you guys to just use bitcoin cash instead. Bitcoin cash uses bigger blocks that can accommodate more transactions per second. We are going to increase it as more people use it. Right now the transactions are nearly free.

The idea is that bitcoin is decentralized. But common sense tells you that by having an append only system, eventually you will need a supercomputer to deal with the blockchain.

Naturally, the blockchain will have to be hierarchical, or find ways to compact it.

Have you seen any announcements from merchants, businesses, exchanges regarding downtime due to congestion? Probably not, because the spam-prevention mechanism built into Bitcoin by Satoshi themselves is working as intended.

On the flipside, you have Ethereum with more or less unbounded block sizes having issues with Cryptokitties congesting the entire network. Numerous entities using Ethereum are unable to do business due to the equivalent of Beanie Babies clogging the network [0][1].

[0] https://www.coindesk.com/ethereums-cryptokitties-blockchain-...

[1] https://twitter.com/myetherwallet/status/874285733707526145

Growing pains. Think about it, it's been less than ten years since bitcoin was created. Give it time. The code will change and it will be able to scale. We now have multi-millionaires that have a very strong incentive to make sure it never fails. 20 years from now the bitcoin code and network will be very different and many of the bugs will be worked out.

I was a disbeliever but now I am a true believer. Bitcoin is here to stay. The only danger is that countries will make it illegal. It really is a danger to the way countries manages their economies. But only time will tell. Keep the coins and enjoy the ride. You won't be sorry. Lucky you.

Bitcoin can be used for transactions? And here I thought it was just used as free money!

What would concern me is, for example, if the cost of a transaction grows faster than the price of a given bitcoin in dollars. If that trend would continue for too long, then I suppose my bitcoin could get trapped in the system for an indefinite period of time, that is, from the time I no longer can justify moving the bitcoin because of high transaction fees to the time I can. It seems that this situation suggests a lower bound on the amount that makes sense to store in a bitcoin wallet. I wonder what that lower bound is today.

I’m not sure why so many people ignore that Bitcoin and all other serious cryptocurrencies are focused on their next generation scalability improvements. Several of the most viable blockchains like EOS are built to be scalable and the legacy coins like Bitcoin are working to adopt similar ideas. When the entire 2018 roadmap is about scalability, it gets boring reading these same posts about how it’s too slow and doesn’t scale without any reference to their work in progress.

Bitcoin involves broadcasting all transactions; that is obviously not scalable, regardless of block size, regardless of PoW, regardless of other design details.

This video: https://youtu.be/GtKhYx2Vlb4 helps explain and address the thought process you're going through now. Bitcoin scaling issues are analogous to many internet technologies such as Ethernet. With Ethernet people initially thought there was no way it could scale to support the whole world because the tech just couldnt support anything more than 1mbps, yet people found a way. They built new technology on top of it, they changed packet routing algorithms and they even changed the underlying physical hardware used. The only thing that remains is the name and the brand, Bitcoin will probably go through a similar development process.

In upcoming Bitcoin technology, the lightning network is really exciting. It's a layer that runs on top of Bitcoin which allows thousands or possibly millions of transactions per second, performed instantly, with almost zero fees. It may have bottlenecks of its own, but I'm sure we can overcome them.

My view of BTC is as digital gold, in that, it is the standard to which other easier-to-trade (digital or fiat or not) currencies are anchored in (so like gold standard). Ever since I started reading about it, this was how it was sold. The new gold standard. In this regard, high transaction fees/times was expected. POW is a feature, not a bug.

Many say that Bitcoin's primary use is a store of value and a horrible medium of exchange. In that light, being unable to make small transactions makes sense, you store your wealth in Bitcoin and leave it there, kind of like a savings account, the high fees and slow transactions don't matter because you are not moving funds. High fees also reduce the amount of transactions in kind of an equilibrium,the higher fees go, the less people are willing to transact, thus lowering fees to the point of usability.

The other camp that wants to use Bitcoin for small transactions is either in the illusory lightning network camp, or more realisticly investing in bitcoin cash. In my opinion, bitcoin has proven itself to be a great store of value but a poor medium of exchange, so just treat it as such.

I don't know what you mean by "prove". People have known about the block size limit for years. It's been increased, but most haven't updated their software to make use of it yet. Lightning now works on mainnet, but no one is using that either.

Maybe it's more proof that no one cares?

Bitcoin, like gold, is useless as a currency.

humans trade on credit not by exchange. Always have done.

You are correct. One interesting point to note is the high disparity between prices on different exchanges.

COinbase shot through the roof, but other notable exchanges were sometimes $5k out for a number of hours. This proves that either people couldn't cross trade (i.e. buy cheap on one market and sell high on the other) or didn't know how to (which is suspect)

this could be because the transaction speed stalled trades, meaning that effectively each exchange became its own global market, either way, having large disparities between exchanges is problematic.

One of the questions I have is why is that a requirement? Why does one network need to support the entire global populations? I mean if it's to be used as fiat currency then I only need it to pay for things roughly in my extended community. Why aren't there seperate networks developing in distinct geographic areas?

Yes, BTC has weaknesses. No, it cannot scale up to "7 billion people using it for every tiny financial transaction" likely even with Lightning. It doesn't need to and you should please ignore the people who say it will.

I love BTC, I think it's great. I think other cryptocoins innovate where BTC can't. But the BTC zealots who act like BTC will displace general purpose banking (or zanier still, the entire financial industry) make this conversation so frustrating.

BTC can be a success without this all-or-nothing campaign. In fact, it is a success because it will continue to exist/store value, and operate as a medium of exchange. It will have hiccups and scaling challenges and we will entertain proposals like segwit and LN which don't radically alter the coin's design.

Unfortunately they alter enough of the design to disturb the economics/incentives for the different roles. Those different roles have had well-aligned incentives for a long time and hopefully they don't continue to drift apart. This is the greatest risk facing Bitcoin IMO. For a long time I was worried about a weakness in the signature hash. But the bounty for that has been so enormous for so long that I'm doubtful one will ever be discovered. So Bitcoin is truly a robust coin, and it can continue to serve us well. If the 15000USD value is based on "7 billion people using it for every tiny financial transaction" then people should probably start shorting BTC (maybe tomorrow evening w/CBOE/Gemini).

Bitcoin is a quasi-legal worldwide distributed mechanism for financial gambling that everyday people can now participate in from their smartphone.

Clearly it has scaled well, it is now one of the more successful means of gambling extant. The fact that it is becoming unusable for any other purpose could have implications, but it's self evident that this use case has scaled considerably.

Bitcoin is Myspace.

You are not wrong. The same math that created BitCoin necessarily ignores the basis for the value is a sociopathic waste of time.

Of course it can't scale. Blocks can't grow larger than 1 MB, which means no more than three transactions per second.

If you want scale, you have to look to Bitcoin Cash (which carries on Bitcoin's original vision of being a massively scalable peer-to-peer electronic cash) or Ethereum.

I use electrum wallet and never had a problem with the default settings - transactions appears after 20 mins.

I think you're right. Bitcoin sucks. It cost around $5 to make a single transaction back in August, and that was when Bitcoin was at 1/3 of its current price in US Dollars. Does anyone know what the cost to make a single transaction is today (in US Dollars)?

I sent $30k for less than $5 and the transaction was confirmed within 15 minutes (second block), the network is fine. Yes it isn't free transfers but they are still possible if you don't mind waiting and your transaction is reasonably sized you are fine.

Watch this prediction.

https://us.teamblind.com/article/update-from-block---btc-fut...

Bitcoin is like gold, has always been. It's pretty bad for routine payments.

Bitcoin has always been slow compared to other alt-coins such as Litecoin.

My understanding is... There is a scaling problem. It could be help by increasing the block size (like segwit2x) But the miners don't want to fix it because they like the high transaction fees.

How is this expected to work with 7 billion people using it for every tiny financial transaction? I don't think it can.

It's not meant to. It stores wealth. Nothing more.

I believe ripple has solved the problem with scaling. It can handle more than 1500 tps and the throughput can be increased upto 50k tps

The idea seems to be that BTC is a store of value (eg: gold) and payments is something to be implemented on a different layer.

Quantum computation will prove much more about the limitations of these cryptocurrencies that we expect.

#shorsalgorithm

Bitcoin is competing with gold, not visa.

Not just BTC. iota, which is supposedly scalable, has come to a screeching halt over the last few days as well

Bitcoin Cash can easily scale.

There never was a "scaling problem." The only problem is "people that don't want Bitcoin to scale."

https://www.reddit.com/r/Bitcoincash/comments/7gmn8t/there_n...

Couldn't bitcoin blocks be 100 times larger? What's the drawback of huge blocks?

What are the best resources for staying up to date with Bitcoin and Ethereum development?

Check out Bitcoin Cash if you want a scalable on chain crypto currency. Bitcoin Cash has the same history as Bitcoin up until August 1st, 2017 when they forked off the majority chain. Bitcoin Cash allows you to send any amount of money to anyone in the world for about 1 penny per transaction.

Crypto-neckbeards be like "Bitcoin is going to $500,000!"

There are altcoin solving all these problems

Not sure if it will ever scale. Look into Iota.

Litecoin is the solution. It was not designed to be a Bitcoin replacement, but rather to handle this exactly.

and what happens if Governments decide by law that bitcoin is illegal?

Buy Ethereum

Etherium

Betteridge's law of headlines.

> have owned BTC for 5 years and I am enjoying the rally, but with the high transaction fees, back ...

That sir is a first world problem!

Litecoin is the solution.

Same question back in 1994 about the internet. "build things that don't scale. PG".

Maybe we learned that coinbase can't scale its website, but that has nothing to do with the ability of BTC to scale.

I don't think you're wrong and there are other problems too. Widespread Bitcoin adoption would require more energy for mining coins than the entire world can currently produce.

The rally is partly because it can’t scale and people are unable to get their bitcoin to an exchange to sell it. Instead it is stuck in the mempool... and there is an increasing amount of bitcoin that can’t be moved because fees surpass its value.

For a bitcoin that has scaled see Bitcoin Cash.

It's not really designed to handle every little transaction. I would expect it to be used by exchanges and banks as a settlement layer, with most transactions happening off-chain.

It's a mistake to look at recent news, because this has been known since the very beginning.

Not only is BTC epicly badly designed (energy consumption=Denmark) but it doesn't solve a problem that anyone actually has (and neither do any of the other cryptos). Nobody uses them to pay for things, and nobody has any incentive to start doing so, because paying for things is not currently a problem. Compare with the Internet boom: along with the stock bubble, millions of people began using this new tool which changed their lives forever. Compare with the housing boom: tons of people got something, at least temporarily, that changed their lives, namely a house. Now look at cryptocurrencies. They having zero effect on ordinary life because they don't solve a problem that anyone has.

> How is this expected to work with 7 billion people using it for every tiny financial transaction? I don't think it can.

Give it ~30 years, for the cost of CPU time/storage space/internet speed to cost 0.1% of what it does today, and — in combination with off-chain clearing — this becomes feasible.

For Bitcoin to even work as money in the first place, people need to store their savings in bitcoins. This transition will take at least ~30 years anyway, which leaves ample time for computing costs to fall to a level where 1GB blocks are realistic. Combined with an off-chain clearing protocol (like Stroem[1]) for consumer-to-merchant payments, this should allow Bitcoin to scale to ~10bn people.

[1] https://www.strawpay.com/docs/stroem-payment-system.pdf

You may place too much value in the transactions of fiat currency. You can still do an in-person trade.

Credit payments may seem instantaneous but they are not. Research the gold standard and who actually stores the gold not the paper receipts for it.

The endgame for bitcoin...Transaction fees? Popup currencies ala private currency?

I hope we are solving some fun math problems with all this distributed hash power.