There's No Bitcoin Nightmare, Just Media Daydreams | dinbits


Over the past few weeks we've seen no shortage of ridiculous media headlines.

BITCOIN IS DEAD! 

BITCOIN IS GONNA DIE! IT IS! 

THE DEVELOPMENT DISCUSSIONS ARE LIKE A NUCLEAR WAR! 

ITS A SCAM! BITCOIN IS A SCAM! 

ITS ALL RUN BY 5 CHINESE GUYS!

ITS HAS FAILED!

BITCOIN IS ONLY USED TO BUY DRUGS!! 

ITS A NIGHTMARE! 

The latter coming from The Verge and author Ben Popper. As usual its all doom and gloom and screams of "the sky is falling" while the real world just moves along barely noticing anything at all but silly headlines.

This one read "Bitcoin's nightmare scenario has come to pass" and was as misguided as the onslaught of articles inaccurately claiming bitcoin had dies for the 89th time in January as critics of the virtual currency desperately grasp for anything they can to pronounce bitcoin damaged, being damaged, dying, or outright dead.

Like the farce in January, the latest article and its spawns are claiming disaster when there is nothing of the sort. Bitcoin isn't dead and there is no nightmare. Daydreams perhaps, but no nightmare. These daydreams are of those who write these silly articles because they have been waiting for years to say "I told you so". We can only speculate on the motives but with all innovation there are just those who are going to hate. 

Haters Gonna Hate

Computers had haters in the 80's. 
The internet had haters in the 90's. 
The iPhone had haters in the 2000's. 
Now, bitcoin and the blockchain has haters.

Well, computers are still around and so is that little fad called the internet. The world as we know it today simply could not function without either one. 

Not only did the iPhone succeed, it had its first copycat the following year (both phone and operating system) and shortly thereafter almost every cell phone available on the market looked exactly like it. It was the dawn of the multi-touch smartphone. 

Bitcoin and its blockchain technology are no different. As the aforementioned article shows us, there's plenty of critics ready to alarm the planet at the slightest hint of anything negative in hopes to see bitcoin go away. Like the iPhone/IOS copycats there have been over 1000 digital currencies and supporting networks (altchains or alternative/alternate blockchains) created since 2009 and IBM, the Linux Foundation, and Microsoft have all begun to support BCAAS solutions or design their own implementations. However most of these so far are just altchain implementations and not the blockchain, as in the bitcoin blockchain. 

Nightmares and Death

The only thing that ever seems to actually die in the industry are brain cells. Allot of those in the media space not industry specific and why we end up with articles like the very topic of this one. 

The one thing that is a bit of a nightmare, is constantly "crying wolf" to the point that if there ever really is a serious problem, many people are going to be so immune to the alarmists headlines that they may actually stand to be put in harms way.

I personally find myself doing this already. I've seen so many of these "bitcoins dead" or "the problem with bitcoin is..." type articles that I just roll my eyes and make a note to read the material later if I have time. Such was the case here. The verge piece was published on March, 2nd. It took me 4 days to get around to reading it.

 "Bitcoin's nightmare scenario has come to pass

I make 100% of my living in the digital currency and blockchain technology industry, the majority of that has to do with the blockchain and its bitcoin. Yet, when I saw the above headline, I just shrugged it off and got around to it today. That's how numb I have become to this type of reporting.

Over morning coffee and a bagel, I read the article and I must admit that I do indeed have one warning to pass along after reading the material. 

Ever shoot coffee through your nose? I highly recommend against it! 

Some of the article was just plain hilarious, so much so that after reading one line I literally laugh out loud so hard that my fresh sip of piping hot coffee wen... well lets just say that I'll be smelling french roast all weekend. 

This week the dire predictions came to pass, as the network reached its capacity, causing transactions around the world to be massively delayed, and in some cases to fail completely. The average time to confirm a transaction has ballooned from 10 minutes to 43 minutes. Users are left confused and shops that once accepted Bitcoin are dropping out.

My oh my ... where do I begin? 

Well first of all "dire predictions" aren't predictions (much less dire predictions) at all, there mathematical certainties. The more people there are using the bitcoin and the blockchain, blocks will fill up with transactions. It's rather simple.

Secondly, the network doesn't have a capacity limit per say, it's capacity is automatically scaled when miners increase and the equipment miners use scales. Currently its true "capacity" is limited only by drive space on a miners equipment and the number of miners participating in supporting the blockchain. 

The blockchain is currently 57.911 GB (as of this writing) in size and generally takes a couple days to download initially. However the delta afterwards is only as big as the transactions that have occurred (1MB per block). You can get a terabyte drive for about $50 and that would hold over 17 copies of the blockchain.

Additionally there is no limit to the number of miners contributing computational power, which currently crunching along somewhere in the 1.44 octillion calculations per second realm. There is also no limit to the speed at which the ASIC (Application Specific Integrated Circuit) process these calculations and technology continues to advance in this area as well. 

Where the actual capacity can be located would be in the block itself, which is the given block of transactions being processed.


Block
Processing  Time
Transactions
Bitcoin
Block Size (Kb)
401295
11 minutes
1481
27,834.94 BTC
965.87
401294
17 minutes
1489
18,050.86 BTC
974.71
401293
21 minutes
2487
48,289.19 BTC
965.87
401292
41 minutes
1124
16,507.10 BTC
976.47
401291
46 minutes
760
8,523.89 BTC
731.65
401290
48 minutes
1907
9,270.86 BTC
974.68















If we look at the last few blocks processed, we see they are near block capacity at 956.87 KB, 974.72 KB, and 965.87 KB. Block can hold 1000 KB or 1 MB at the most. You'll also notice a few other things. There were only 731.65 KB on a recent block and the last two block processed in under 20 minutes.

They are certainly full and some have exceeded the 1 MB limit causing some minor delays, most of which have gone unnoticed or were a minor inconvenience at best. Out of the last 6 blocks the longest one took 48 minutes. I wouldn't called that massively delayed and failures are common when there are orphaned blocks or double spend attempts of which the network is designed to resist. They happen frequently so this past week was not a shocking occurrence.

That said, there were some longer than normal transactions this past week, but this has been slowing down a bit for quite a while. Most people expect an hour for their transactions to fully process anyway.

Users are left confused and shops that once accepted Bitcoin are dropping out.

The nose coffee was a result of the above line of unintentional comedy. Being one of the individuals who sends transactions almost hourly, I can tell you that I barely noticed a damn thing. It was business as normal and this wasn't even on the radar other than 1 transaction I sent that took a few hours. This is nothing brand new. There are always slower blocks, especially lately.

Everywhere that I used bitcoin this past week, still took bitcoin. I renewed a domain, booked a couple upcoming hotels stays, and ate lunch every day. No problems. No issues.

In fact, the shops that are dropping out is actually just one shop that is temporarily halting its bitcoin acceptance. 



Which is kind of ridiculous if you think about it. They'll take a check, cash, a credit card, hell maybe even PayPal. Three methods of payment which are easily reversible if someone wants to rip you off and another easy to just fake. However, they halt bitcoin payments on the off chance that someone just so happens to be knowledgeable enough with the technology to know how to do this in the first place and goes through the trouble of doing it. All over a $2 beer ... like I said ... ridiculous.

"Unfortunately we are no longer able to accept Bitcoin while there is such a high probability that transactions will not confirm."

Luckily having learned my lesson for the day with the previous coffee sip, this one didn't get me too. This was the Reddit post in regards to the exodus of payment acceptance (the one bar). Additionally they had a sign up (see image above).

Well as you can see blocks are indeed full, which is a great thing, but where this high probability of transactions not confirming comes from is anyone's guess since it's actually rather improbable for them not to confirm. Especially if you don't cheap out and pay a decent transaction fee.

This was not only a poor choice for reference material the owners of the establishment don't seem to have a clue as to what's going on either.

The Rest of The Story

Story, Fairy Tale, or however this can be more accurately described, it certainly sounded like the "daydream of a bitcoin hater" more than anything. 

The article goes on to say that miners in China control the majority of the blockchain and are making all the decisions, which is not true, and spins the facts in a way that sounds like increasing the block size at all is a debated topic between two versions of the source code, Classic and Core, which is also not true.

Chinese mining pool represent over 50% of the hash power at times, however, that hash power does not necessarily belong to, nor is it controlled, by them and folks can discontinue use of these pools at any time. The hash power comes in from all over the world. Not too long ago the CEX.IO pool had risen just above 50% of the total hash rate all by itself and people worldwide were quick to react yanking hash power from its influence. This control is that of the individually own mining machines and its all of a power switch away.

It's also not just one company in China, there are several and they are competitors. We should also not confuse "China" the country with the companies that operate these pools. I frequently hear people blame the "Chinese" saying the "Chinese are doing this..." or "China controls it...." just because a few pools that constitute a percentage of the blockchains hash power are located there. The rest of the world has just as much opportunity to setup whatever mining pool they so desire and match the payout shares, not to mention that companies like Bitmain (Antpool) are international and affect multiple economies globally.

The debate is not about if the block size should be increased, it's how to best achieve this, and each team has other initiatives involves in the development of each effort. Naturally each wants to be first. However, increasing the block size is something they both agree with.

The Core team says the network is congested because Classic advocates are spamming the network with low fee transactions miners can't be bothered to accept.

This has always been the case with the existing software, it happened during the XT test, and it will forever continue to occur. Sometimes humans are jerks. There's little anyone from either team can do about this anyway. 

You can configure mining software around this so it reduces the miners mempool and this becomes less of an issue. DDos is another issue being mentioned, however, this is also a common occurrence, and there are ways to deal with this as well. Starting with more nodes.

This behavior is dealt with by every exchange, media outlet, bank, government site, eCommerce outlet, and auction service on planet earth all the time. Expecting this to discontinue is about as ridiculous as expecting a "private blockchain" or "bitcoin-less blockchain"¹ to actually work safely in the real world.

So What's The Problem?

We cover this a bit more in depth in this article which explains things in plain English, but aside from melodramatic media rhetoric, there is really nothing wrong.

There's a discussion between development teams on how best to complete the task, some of these discussion have gotten rather heated and perhaps some games have been played, who really knows.

Jerks will be jerks and nothing on earth s going to change that. 

However, this is the way things are supposed to work. It should take a monumental effort to make major changes to the blockchain. It should take a years worth of discussion. This is how it should be working and ultimately is a positive thing.

Is it pleasant? No. 
Will it result in higher fees? Maybe, but lets be honest, high priority fees are mere pennies. 
Is it the best thing for the blockchain? Probably. 

Would you really trust a system that deals with your money if just anyone could easily slap in major changes?

One of the many major problems with current financial networks and software systems is that the company who develops the software makes all of these decisions, right or wrong. There's never enough discussion and ultimately one individual or a steering committee of a few individuals makes a decision. It's tested using automated tools and by people who do just enough to not get fired. 

This is why, despite strict PCI and SOX compliance programs, we keep hearing about information being stolen from banks, financial services, websites, and retail outlets. This is why despite all the security features on the planet have yet to stop credit card theft. 

This is one of the many reasons why and how the blockchain came to be in the first place, nothing else worked. The blockchain works, bitcoin works, and if you start shoving code in to meet deadlines like the companies that do this today on private networks then you'll end up with the same problems that plague these services.

That's why it's hard to make these changes and requires full consensus and as frustrated as miners, developers, merchants, and others can get sometimes to the delight of critics who attempt to spin the information negatively, this process is actually a positive force in the universe.






Story by dinbits
image by dinbits staff
Footnotes:
1. The term bitcoin-less used is meant to include any token or crypto-currency as in a token-less blockchain or altchain.

2. AntPool (one of the "Chinese" pools) is run by Bitmain and an international company with offices in multiple countries including here in the United States.


The opinions expressed by authors of articles linked, referenced, or published on dinbits.com do not necessarily express, nor are endorsed by, the opinions the of dinbits.com or its affiliates.


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