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While Bitcoin Struggles to Adapt, the Future is Bright for Blockchain

Recent developments in the ever-changing cryptocurrency world have caused investors to seriously consider their positions in digital currencies like bitcoin. For several years now stakeholders in the digital currency space have lamented the scaling dilemma of bitcoin, in which the network that processes its payments, called the Blockchain, can only handle a certain amount of transactions at one time.

Each of the individual “blocks” in the currency’s Blockchain contains transaction data and information but, because block size is limited to one megabyte, each block can only process about seven transactions a second. As Bitcoin continues to surge in popularity the number of sales on its network has grown and thus have forced users to endure significant wait times or pay exorbitant transaction fees. This congestion is particularly alarming because there are around 47,000 Visa transaction messages per second, lending credence to the idea that, as Bitcoin rises, so too must its infrastructure.

While it is doubtful that Bitcoin’s transaction volume will eclipse that of Visa or any major electronic payment method in the foreseeable future, the cryptocurrency has already faced significant competition from other rivals such as Ethereum due in part to the latter’s ability to handle larger volumes of transactions at higher and more consistent speeds. Therefore, many people in the bitcoin community believe that an expansion of its infrastructure capacity is necessary, but individuals are still debating on how far this expansion ought to go.

Paul Vigna of The Wall Street Journal reported that two camps have emerged on either end of this discussion. One group wants to capitalize on the increased demand in the cryptocurrency world and vastly expand the network’s capability to handle transactions so that Bitcoin becomes as easy to trade as other, very liquid assets. The second group sees bitcoin’s soaring value, limited supply, and slower network and says that Bitcoin would work better as a digital asset and as a store of value rather than a medium of exchange. As a result, either proposal could send investors, whether they be potential or heavily leveraged, elsewhere or to a rival currency depending on which camp wins out.

Though a split could happen, there are some proposals, like Segwit2x, that have the backing of a majority of the firms that “mine” and hash out the bitcoin infrastructure. Segwit2x is just a code upgrade for Bitcoin’s blockchain network that would double the size of individual blocks to two megabytes. Pete Rizzo and Alyssa Hertig of Coindesk have pointed out that other proposals to increase the efficiency and capacity of the blockchain network have fallen by the wayside, and many in the industry are predicting a split in Bitcoin’s blockchain network between high and low-capacity systems to better meet the demands of the two opposing groups.

Despite the difficulties on the currency side, blockchain networks still are being explored by organizations like the UN with regards to secure data storage and digital records. According to a briefing by the Economist, one of the most accessible ways that Blockchain technology could be widely used is the keeping of documents. Many firms, like Everledger, OneName, and CoinSpark act as registries for luxury goods, personal information, or as notaries, respectively. Expanding these could be tremendously beneficial in maintaining consistent databases on things like property titles and other record keeping, something that the government of the Republic of Georgia has already started doing.

Additionally, huge institutions like the Bank of England and the NASDAQ are now looking at the ledger-keeping ability of this technology with eager eyes. Consumers may end up having access to efficient blockchain networks to pay for goods on popular websites like Overstock.com, and they may also be able to place or view personal documents, information, and the like in a new, uniquely digital way.

The potential for a split could mean two separate blockchain infrastructures to satisfy infighting within the community, but compromises appear to be a possibility, as well. Despite this, the future of blockchain technology as a whole seems to be continually brightening as governments and large firms like Toyota pushing for blockchain adaptation. Just like the market that it operates in, the future for Bitcoin appears to be very volatile. However, the future for smarter, more innovative technologies has never been brighter.

Read More:

“The great chain of being sure about things” (The Economist)

“The Virtual-Currency War That Threatens to Tear Bitcoin Apart” (Paul Vigna, The Wall Street Journal)

“The First Government To Secure Land Titles On The Bitcoin Blockchain Expands Project” (Laura Shin, Forbes)

“Bitcoin’s New Scaling ‘Agreement’: The Reaction” (Pete Rizzo and Alyssa Hertig, Coindesk)

 

Image Source: Artist, Stock Photo, License Summary.