Programming
Article
By Elio Qoshi

Quick Read: Blockchain’s Future after Bitcoin

By Elio Qoshi

In January 2016, fellow Bitcoin developer, Mike Hearn, dropped the bomb — Bitcoin has failed. While “failing” might be a bit overdramatic, his reasoning is far from an overstatement. Hearn explained why Bitcoin and its community has failed like so:

What was meant to be a new, decentralized form of money that lacked “systemically important institutions” and [was] “too big to fail” has become something even worse: a system completely controlled by just a handful of people. Worse still, the network is on the brink of technical collapse. The mechanisms that should have prevented this outcome have broken down, and as a result there’s no longer much reason to think Bitcoin can actually be better than the existing financial system.

What happened? Essentially, Bitcoin’s blockchain is full. An artificial capacity cap of one megabyte per block, utilized as a temporary kludge a long time ago, has not been removed and results to the network’s capacity to be almost completely exhausted.

As an effect, over 95% of Bitcoin mining hashing power is controlled by a handful of people.

But What About The Blockchain?

Bitcoin is to blockchain what currency is to money. Just because a certain currency has failed, doesn’t mean money has failed.

Blockchain logo

The whole concept behind the blockchain is exciting as well (with or without Bitcoin). While traditionally, financial firms keep track of their assets in separate databases, they would need to share just one via the blockchain, which would result in instant trades with less risk. This is advantageous for anti-money-laundering and other regulations as well, since the blockchain provides a record of all past transactions.

Let alone how happy PR people will be! Banks often have the (deserved) reputation of living in the past and having difficulties catching up with the times (hell, I can’t even figure out the e-banking features at my bank). Investing in the blockchain makes banks look highly innovative, which even if done in a mediocre way, can be a quite good marketing stunt.

However, when it comes to more than PR, using the blockchain to its full potential will require some time. The enormous number of transactions done by banks nowadays is impossible to handle by today’s distributed ledgers. However, it will eventually get there.

Oh, and before you ask why Bitcoin cannot be used by financial institutions —

It is all down to the number of transactions processable per second. Bitcoin’s blockchain network is only capable of processing about six or seven transactions per second.

To put this into perspective, Visa can process 65,000 transactions a second.

Prediction

It is predicted that widespread use of the blockchain will happen in about five to ten years.

However, here’s another exciting thing about the blockchain — It can be used for far more things than cash. The blockchain can actually facilitate the transfer of value of anything digital. We might send each other invoices and contracts in the future which would have a fully secure and visible digital record of the transaction and all the data that is associated with it. I find that pretty exciting!

  • Vuco vuco Xerxeador de opinião

    But BitCoin is open-source, isn’t it?
    Any problem can be solved by the community. And the community is growing up.
    More people using bitcoin means more people and companies interested in using the network (mining, etc).
    So I think bitcoin will solve your problems over time, as well as a system in constant evolution.

  • Jean-Mouloud

    Have you forgotten that bitcoin can evolve and fix all the issues you highlighted? (some already fixed btw)

    • jadaman

      can you elaborate?

  • Sun Drez

    Elio your article is trash….

    • Elio Qoshi

      Wow, I call that constructive :)
      Thank you for taking the time to write that constructive feedback over here.

      • Bitcoin is another tool which is ideal to drastically reduce current international bank charges. Why pay a minimum of about 20 USD for small transfers between countries? No wonder foreign workers are undernourished, they are losing the opportunity of buying about 5 hamburgers :)

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