Scalability: The Litmus Test for Bitcoin in 2018 By Benjamin Roussey
The year 2017 was a watershed period in the history of bitcoin, with its price shattering all records and freely demolishing all the market resistance that industry naysayers [including Warren Buffett (though he also said the economy would tank under Trump and was against the Keystone Pipeline since he makes money off his trains so his logic and statements should come with a grain of salt)] tried to introduce to stop this cryptocurrency juggernaut.
However, the bitcoin price storm began to calm towards the end of 2017 and it remains to be seen how it proceeds from here in 2018.
However, regardless of the market volatility (which is driven more by sentiment than logic), at the center of bitcoin’s future sustainability lies the question of its scalability.
Without attaining scale, bitcoin, Ethereum, and other cryptocurrencies might end up being nothing more than the proverbial storm in a teacup. To truly live up to the hype and challenge the mainstream payment systems, these digital currencies will have to pass the test of security, speed, reliability, and low costs.
Scaling the Edge
In November of 2017, academics from Stanford University along with a few leading figures from the blockchain industry came together for a conference to address the fundamental issue of scalability surrounding the future of cryptocurrencies.
The conference, “Scaling the Edge,” revealed a near-unanimous concern among the attendees that the toughest hurdle in the path of scalability of cryptocurrencies such as bitcoin is a dearth of serious software developers and programmers who are dedicated to the cause of building a dependable virtual infrastructure for cryptocurrencies to achieve scale.
Some of the prominent bitcoin experts and entrepreneurs at the conference echoed the view that the cryptocurrency ecosystem is still in its infancy, and if it is not nurtured by some of the best tech minds in the industry who can train an entire army of developers focused on blockchain technologies, the ecosystem might suffocate and die before we know it.
Need for Experienced Developers
The conference and the related workshops highlighted the challenge that the current lot of handful of blockchain developers neither has the time nor the capacity to do any justice to the scaling of cryptocurrencies. For bitcoin and alt coins to become the real game-changers that they promise to be, there is a screaming need to bring together experienced developers who can help create the digital architecture necessary for scale.
Although it is easy to get swayed by sentiment and start believing in the ‘instant’ transformative power of any compelling digital innovation, the harsh truth that experienced developers know first-hand is that an incredible amount of painstaking software development effort goes behind such evolutions.
Coming up with revolutionary ideas at the programming level, and implementing them successfully on a global scale are two entirely different things in the world of digital technology.
Streamlining and Prioritizing Blockchain
A real challenge that stares blockchain developers in their face at present is getting the business order right and prioritizing the tasks at hand. Possibilities in blockchain technology are endless. However, when the variables and possibilities are countless, the differences in opinion and intellectual conflict are extremely high as well.
This is why it is all the more vital in such new and ground-breaking technological developments to have top experts who are dedicated to the cause, constantly debate the variables and possibilities, and guide the implementation in the right direction using effective risk models.
Challenges of Transaction Time
One of the major scaling issues that cryptocurrencies such as bitcoin will have to tackle in order to go more mainstream like PayPal, Visa, or Western Union, is the issue of transaction time. To attain scale, the cryptocurrency transaction times will have to be dramatically reduced. For instance, while Visa handles 1,667 transactions per second, Bitcoin manages only 7 transactions per second at present. To achieve scale, Bitcoin will have to step up and substantially improve this number.
A transaction in Bitcoin goes through when miners put the transaction data in their mined blocks. For instance, if John wants to send 5 BTC to Mary, he will send the transaction data to a miner, who will then put it in their block to complete the transaction. But this process gets more time consuming as Bitcoin grows in popularity. Furthermore, there is also a concern about the transaction fees that has to be paid to the miners.
Miners will increase the speed of transactions if they receive a higher transaction fee. But this might not be financially viable if Bitcoin must compete with the mainstream methods. For users who currently want to pay the smallest possible transaction fee, they are required to wait for an average of 13 minutes before their transaction can go through.
The Future Path
The seemingly monumental hurdles of speed, security, reliability, and costs are something that bitcoin and other cryptocurrencies will have to overcome if they want to truly achieve scale. A large number of aspiring developers who have a desire to enter the arena of blockchain technology may currently feel deterred by the complexity and enormity of the task and more so by a lack to training and mentoring opportunities in this field today.
However, these barriers of scalability can be addressed if large technology companies and international financiers start putting their money, manpower, and resources behind blockchain technology. Whether and when that happens is going to be the litmus test for bitcoin in 2018 and beyond.