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The moment Bitcoin is very interesting, and perhaps even is the key.
In a referendum in the UK, many financial media has realized the growing role of Bitcoin as a safe-haven asset for capital. In addition, institutional investors such as Daniel masters, are beginning to indicate a willingness of Bitcoin to rise on the big stage, despite the fact that the capitalization of this market is still fluctuating around $10 billion.
Bitcoin investment prospects continue to improve, but many still relevant question: is it possible to scale the network so that it could satisfy a mass audience?
On its current trajectory development, some argue that this is impossible.
The developers of the Core team have a long-term plan for this, but there are opponents waiting, requiring immediate action. In the coming months it will become clear whose approach is adopted, because it is important to understand and if required a hasty change of Protocol for the continued success of Bitcoin.
How can Bitcoin scale?
The dream of Bitcoin evangelists is the complete victory of the cryptocurrency over the global Fiat system. Bitcoin, in their opinion, should become the main means of all transactions.
To get at least the chance to implement such a high goal, Bitcoin must first overcome the very real technical limitations. Today, the network is able to handle only a few transactions per second. Lying on the surface way to deal with this limitation is simply to increase the size limit of the block. But it's also the worst way to solve this problem.
Any increase of the block creates a lot of pressure in the direction of centralization of the core network. But without decentralization Bitcoin is vulnerable to censorship and attacks. In other words, any increase in the size of the block in any case would be a compromise between decentralization and network bandwidth.
Note also that a key feature of Bitcoin is its resistance to censorship and all kinds of interventions from the outside. Without this, Bitcoin will be just a cumbersome and expensive version of PayPal. Thus, if there are ways of scaling does not hinder the decentralization of the network, then obviously you need to choose them.
That's why we need a long-term solution to the problem of scaling, critical its essence.
The network in the form as we have it, can not be effectively scaled, therefore, need to build a network on top of Bitcoin, in which this problem will be solved. It is also possible to implement in a core network, a number of updates, such as Segregated Witness, effectively increasing the network bandwidth due to the different optimizations without increasing the size of the block.
SegWit also lays the Foundation for future updates that will expand the functionality of Bitcoin and will significantly increase its capacity. These include such concepts as chain Lightning and Sydeny.
Does the current size limit unit of speed of adoption?
But even the fact that Segregated Witness already undergoing testing and is close to implementation, but various embodiments of implementations of protocols on top of Bitcoin are in active development, not reassuring supporters hasty decisions. Some of them continue to insist that the problem of overcrowding in the blocks approaching with terrifying speed.
Their reasoning is approximately as follows: the more blocks you have, the slower the network, the higher transaction fees. This slows down the acceptance, and this, in turn, causes harm to the network effect and kills Bitcoin. Therefore, we need hardwork urgently increase the block size to 2 megabytes, not yet ready for long-term solution to the problem.
They forget that even such a slight increase in the size of the block still carries security risks, and remains a cumbersome way to scale Bitcoin.
In this light, the only reason to continue to insist on hard forks, are compelling evidence that MB blocks do hinder short-term and medium-term adoption. But so far, there is no evidence that this is true.
On average, more total blocks means the growth of commissions, if users refuse to pay, the confirmation of their transactions really slow down.
From the point of view of Bitcoin evangelists, it is easy to see how this could hurt adoption. The consumer who first used Bitcoin and experienced noticeable delay approval of the transaction when carrying out retail transactions, it may scare. To say it is over hyped technology that is not working as it's advertising promises.
But it is precisely these little retail trades overload the unit, occupying a disproportionate (relative to volume of the means sent) space. The problem is that such a scenario of mass use of Bitcoin for making retail transactions (each a Cup of coffee on the blockchain!), largely is just an unattainable dream.
Bitcoin is still a long way to go (perhaps a few years) to become quite simple and easy to use for everyday expenses of the average consumer. At the moment, to use it for making small purchases is not very convenient. The moment widespread adoption is yet to come, and the reason for the overcrowding in the blocks is not in it. The true reason is simple, but very significant: volatility.
No average consumer (if it is not out of his mind) will not be used for daily expenses currency with such wild volatility, if the hand is much more stable options.
To the media gradually begins to realize that the lion's share of the current growth rate of Bitcoin is undoubtedly connected with investment and speculative activities. Transactions of this type much larger than the volume sent bitcoins than retail.
This correlates with the numbers of the website Tradeblock, which show that the average bitcoin transaction in the interval from 27 may to 25 June was about 12-14 BTC. It is much more than any conceivable retail purchase.
In this area, Bitcoin has no need to compete with the instant money transfer systems such as VISA. It also does not need the stability of the exchange rate. All you need is to win over traditional Bank transfers and offer better terms for international transfers (for which the classical structures like Western Union takes 3 to 5 working days and payment of a wild commissions).
In this niche, the reputation of Bitcoin will only grow, as well as his popularity as an investment asset. All it will pull up its capitalization. As a result, the volatility will have to decrease over time, making it more suitable for everyday use by the average consumer.
That's when a reliable, fast and cheap transactions will become much more important for the continued growth of Bitcoin. But in the next few months, it will not happen. This likely will not happen even by the time when it will be launched a network of Lightning. Probably it will not be for some time after its launch.
This is because the termination of the domination of Fiat currency is a very long process. No radical change like this does not happen overnight. True Bitcoin evangelists have patience.
Evangelists who believe that the total blocks will damage or even will kill Bitcoin in the short term, for the trees see the forest. They want to see mass adoption of Bitcoin, and make the mistake of believing that it will happen already in the first growth phase.
In fact, even if Bitcoin was not a bandwidth limitation on the number of transactions per unit of time, we are still far from the point of widespread adoption. Mass is still very little effect on the growth of Bitcoin. Investors and speculators will continue to accomplish this difficult task, and the system will still work perfectly even with a filled blocks.
The increase in block size will eventually happen, but this is only a small part of the equation for scaling Bitcoin. Hardwork right now will not give us anything but illusory progress and new challenges for the developers of the Bitcoin Core team.
Scalability Bitcoin is not a challenge that can be easily solved. But calm, persistent targeted efforts, coupled with creative approach will do the trick.
Hurry here obviously to anything, the more there is no evidence that the mass adoption somehow suffer from the current restrictions on block size of 1 megabyte.
