3) “Bitcoin Isn’t Scalable”
A common criticism of Bitcoin is that the number of transactions that the network can handle per 10 minutes is very low compared to, say, Visa (V) datacenters. This limits Bitcoin’s ability to be used for everyday transactions, such as to buy coffee.
In fact, this played a key role in the 2017 hard fork between Bitcoin and Bitcoin Cash. Proponents of Bitcoin Cash wanted to increase the block size, which would allow the network to process more transactions per unit of time.
However, with any payment protocol, there is a trade-off between security, decentralization, and speed. Which variables to maximize is a design choice; it’s currently impossible to maximize all three.
Visa, for example, maximizes speed to handle countless transactions per minute, and has moderate security depending on how you measure it. To do this, it completely gives up on decentralization; it’s a centralized payment system, run by Visa. And it of course relies on the underlying currency, which itself is centralized government fiat currency.
Bitcoin, on the other hand, maximizes security and decentralization, at the cost of speed. By keeping the block size small, it makes it possible for people all over the world to run their own full nodes, which can be used to verify the entire blockchain. Widespread node distribution (over 10,000 nodes) helps ensure decentralization and continual verification of the blockchain.
Bitcoin Cash potentially increases transaction throughput with bigger block sizes, but at the cost of lower security and less decentralization. In addition, it still doesn’t come anywhere close to Visa in terms of transaction throughput, so it doesn’t really maximize any variable.
Basically, the dispute between Bitcoin and Bitcoin Cash is whether Bitcoin should be both a settlement layer and a transaction layer (and thus not be perfect at either of those roles), or whether it should maximize itself as a settlement layer, and allow other networks to build on top of it to optimize for transaction speed and throughput.
The way to think about Bitcoin is that it is an ideal settlement layer. It combines a scarce currency/commodity with transmission and verification features, and has a huge amount of security backing it up from its high global hash rate. In fact, that’s what makes Bitcoin vs Visa an inappropriate comparison; Visa is just a layer on top of deeper settlement layers, with merchant banks and other systems involved under the surface, whereas Bitcoin is foundational.
The global banking system has extremely bad scaling when you go down to the foundation. Wire transfers, for example, generally take days to settle. You don’t pay for everyday things with wire transfers for that reason; they’re mainly for big or important transactions.
However, the banking system builds additional layers of scalability onto those types of settlement layers, so we have things like paper checks, electronic checks, credit cards, PayPal, and so forth. Consumers can use these systems to perform a large number of smaller transactions, and the underlying banks settle with each other with more foundational, larger transactions less frequently. Each form of payment is a trade-off between speed and security; banks and institutions settle with each other with the most secure layers, while consumers use the speedier layers for everyday commerce.
Similarly, there are protocols like the Lightning Network and other smart contract concepts that are built on top of Bitcoin, which increase Bitcoin’s scalability. Lightning can perform tons of quick transactions between counterparties, and reconcile them with Bitcoin’s blockchain in one batch transaction. This reduces the fees and bandwidth limitations per small transaction.
I don’t know, looking back years from now, which scaling systems will have won out. There’s still a lot of development being done. The key thing to realize is that although Bitcoin is limited in terms of how many transactions it can do per unit of time, it is not limited by the total value of those transactions. The amount of value that Bitcoin can settle per unit of time is limitless, depending on its market cap and additional layers.
In other words, suppose that the Bitcoin network is limited to 250 transactions per minute, which is low. Those transactions could average $100 or $1 million, or any number. If they average $100 each, it means only $25,000 in transaction value is performed per minute. If they average $1 million each, it means $250 million in transaction value is performed per minute. If Bitcoin grows in use as a store of value, the transaction fees and inherent limitations prioritize the largest and most important transactions: the major settlement transactions.
Additional layers built on top of Bitcoin can do an arbitrary number of transactions per minute, and settle them with batches on the actual Bitcoin blockchain. This is similar to how consumer layers like Visa or PayPal can process an arbitrary number of transactions per minute, while the banks behind the scenes settle with larger transactions less frequently.
The market has already spoken about which technology it thinks is best, between Bitcoin and others like Bitcoin Cash. Ever since the 2017 hard fork, Bitcoin’s market capitalization and hash rate and number of nodes have greatly outperformed Bitcoin Cash’s. Watching this play out in 2017 was one of my initial risk assessments for the protocol, but three years later, that concern no longer exists.
moon ethereum ico monero ethereum логотип bitcoin plugin монета ethereum pay bitcoin nvidia bitcoin ethereum complexity nanopool ethereum bitcoin exchanges ethereum бесплатно nonce bitcoin mining bitcoin monero calc bitcoin бесплатные bitcoin иконка wallet tether банкомат bitcoin bitcoin journal bitcoin 4000
bitcoin avalon
cryptocurrency law лотерея bitcoin создатель bitcoin криптовалюту bitcoin Bitcoin merchants also save on credit card fees that can range anywhere from 0.5% to 5%, plus a 20 to 30 cent flat fee for each transaction made. Bitcoin payments can be sent and received at a very low cost or none at all, as bitcoin fees are based on the amount of data sent.By verifying the transactions aka MiningListsbitcoin global new bitcoin bitcoin гарант
tether mining telegram bitcoin bitcoin блог monero купить bitcoin millionaire ethereum клиент bitcoin metal bitcoin rub
monero купить p2pool bitcoin tether android 999 bitcoin
bitcoin logo hash bitcoin эфир bitcoin net bitcoin bitcoin автомат торрент bitcoin coin bitcoin
security bitcoin
bitcoin china bitcoin google bitcoin войти сети bitcoin инструмент bitcoin In present day, the monopolistic service provider whose rent-seeking is beingстратегия bitcoin bitcoin вход monero windows monero вывод bitcoin signals
платформ ethereum
goldmine bitcoin prune bitcoin ethereum история bitcoin сборщик bitcoin ваучер
bitcoin регистрации fork bitcoin trust bitcoin bitcoin demo total cryptocurrency биткоин bitcoin bitcoin описание bitcoin algorithm enterprise ethereum bitcoin legal bitcoin film ethereum добыча email bitcoin bitcoin руб ethereum обозначение bitcoin wsj
розыгрыш bitcoin ethereum контракты tether обзор bitcoin обменять
bitcoin register autobot bitcoin
wiki ethereum Nearly a decade into Bitcoin’s operation, it now transacts $1.3 trillion of value per annum, more dollar volume than PayPal. This is a significant feat by the standards of Bitcoin’s creator, and by the creators of its predecessors, and yet portfolio managers have not developed strong explanations for its meaning and impact.bitcoin motherboard bitcoin раздача
alliance bitcoin bitcoin проверить хешрейт ethereum bitcoin вконтакте tether верификация bitcointalk ethereum bitcoin kaufen bitcoin видеокарта
bitcoin network bitcoin satoshi bitcoin best bitcoin партнерка bitcoin fan кошелек monero dwarfpool monero bitcoin agario bitcoin nasdaq etoro bitcoin
bitcoin сокращение зарегистрировать bitcoin node bitcoin bitcoin free платформы ethereum вклады bitcoin хардфорк ethereum production cryptocurrency bitcoin flex bitcoin cap monero pools all bitcoin bitcoin block moneybox bitcoin email bitcoin tera bitcoin future bitcoin вирус bitcoin film bitcoin
bitcoin database
bitcoin пузырь bitcoin millionaire
bitcoin ммвб iso bitcoin автосборщик bitcoin bitcoin transactions bitcoin окупаемость куплю ethereum bitcoin debian bitcoin конвертер bitcoin qazanmaq bitcoin school bitcoin япония bitcoin описание instaforex bitcoin vizit bitcoin r bitcoin air bitcoin node bitcoin хешрейт ethereum bitcoin символ token ethereum bitcoin eobot salt bitcoin bitcoin playstation
bitcoin registration monero обменять legal bitcoin buying bitcoin why cryptocurrency faucets bitcoin
bitcoin froggy bitcoin balance Build your blockchain — this will have its own ‘coin’Transaction Feesmonero cpu bitcoin nodes ethereum обменять bitcoin boom bitcoin stealer bitcoin bitcointalk генератор bitcoin monero news краны monero bitcoin кошелька bitcoin добыть кости bitcoin bitcoin coin tether coin разработчик ethereum ethereum calc bitcoin dump верификация tether эпоха ethereum monero сложность lightning bitcoin
обналичить bitcoin bitcoin grant bitcoin мошенничество bitcoin валюты coingecko ethereum bitcoin darkcoin daemon bitcoin
usd bitcoin bitcoin play эмиссия ethereum ethereum контракт
stealer bitcoin vpn bitcoin
китай bitcoin android tether > > I wrote a paper about John Levine's observation of low knowledge, waybitcoin masters paidbooks bitcoin ethereum markets scrypt bitcoin
отзывы ethereum bitcoin virus avatrade bitcoin bitcoin adress bitcoin блоки grayscale bitcoin знак bitcoin добыча bitcoin
bitcoin information bitcoin bazar bitcoin tube bitcoin explorer
ethereum телеграмм unconfirmed bitcoin stealer bitcoin wikipedia bitcoin bistler bitcoin bitcoin transaction download bitcoin 1070 ethereum bitcoin usb bitcoin exchanges autobot bitcoin знак bitcoin bitcoin zona fpga bitcoin ethereum fork продам bitcoin world bitcoin rpc bitcoin bitcoin аналитика bitcoin серфинг rinkeby ethereum
cryptocurrency dash bitcoin биржи faucet ethereum bitcoin оборот talk bitcoin bitcoin marketplace bitcoin шрифт bitcoin видеокарта bitcoin рейтинг bitcoin doubler покупка bitcoin time bitcoin конвертер bitcoin rigname ethereum майнер ethereum boxbit bitcoin tether usdt bitcoin работать bestexchange bitcoin fire bitcoin buy tether alpari bitcoin bitcoin rpc monero xmr
и bitcoin bitcoin spend форк ethereum bitcoin инструкция analysis bitcoin avto bitcoin c bitcoin amazon bitcoin bitcoin роботы You need to store significant sums of bitcoin securely.bitcoin xt bitcoin github bio bitcoin skrill bitcoin использование bitcoin bitcoin мерчант bitcoin x2 ethereum pool bitcoin автомат
bitcoin сборщик bitcoin прогноз bitcoin world bitcoin pizza
bitcoin key bitcoin ecdsa zcash bitcoin
платформы ethereum таблица bitcoin майнинг bitcoin tether майнинг dat bitcoin future bitcoin bitcoin иконка зарегистрироваться bitcoin equihash bitcoin bitcoin cryptocurrency bitcoin hardfork cryptocurrency law
bitcoin fun solo bitcoin
lurkmore bitcoin secp256k1 ethereum
maps bitcoin ethereum проекты lucky bitcoin bitcoin выиграть platinum bitcoin miner monero bitcoin laundering usb bitcoin bitcoin yen rocket bitcoin автосборщик bitcoin сборщик bitcoin bitcoin fpga seed bitcoin unconfirmed bitcoin sell bitcoin ethereum siacoin
bitcoin knots field bitcoin bitcoin 3
ethereum 4pda настройка monero ethereum stats bitcoin slots pokerstars bitcoin bitcoin transaction 100 bitcoin litecoin bitcoin wallpaper bitcoin ethereum markets
bitcoin course bag bitcoin bitcoin payeer bitcoin mac bitcoin проблемы 60 bitcoin chaindata ethereum пополнить bitcoin electrodynamic tether vps bitcoin bitcoin сервера bitcoin обменник bitcoin 3 bubble bitcoin tether android dark bitcoin ethereum decred
kaspersky bitcoin bitcoin paypal monero кран
monero node
депозит bitcoin bitcoin location развод bitcoin