“Bitcoin is the future of the global economy”. We have been saying these words for a while now and even Bitcoin has been showing signs of stabilizing. The value of this widely adopted digital currency has been fluctuating around the $250 mark in the past few months. But Bitcoin’s future rests on a precarious slope. Bitcoin network and the technology surrounding it needs improvements in the near future in order to be sustainable.
Introduced in 2008 by the elusive Satoshi Nakamoto, Bitcoin has gained a lot of users since then. Even though the application of Blockchain has now expanded beyond Bitcoin transactions, most of its properties still remain the same. Blockchain is made of a series of blocks, where each block contains information pertaining to Bitcoin transactions. The current block size is fixed at 1 MB, due to which the network cannot process more than 7 transactions per second. As the volume of transactions increases, the pressure on the Bitcoin network increases and it may even result in the breakdown of the system.
Given the situation, a part of the Bitcoin community wants the block size to be increased and it is being met with stiff resistance by another group mostly comprised of Bitcoin miners. These miners are responsible for verifying transactions over the network in return for Bitcoins and any changes in the block size may affect their earnings. Also increasing the block size will be beneficial for the Bitcoin 2.0 products.
At the same time, mining has been a lucrative opportunity for people to earn Bitcoins. Mining is carried out by using special processing devices called ASICs. These are cost and energy intensive devices built for one specific purpose – Bitcoin mining. But with the launch of 21 Inc.’s BitShare, an embeddable chip, any electronic device with an Internet connection can become part of the Bitcoin mining network. If these chips turn out to be effective, then the number of Bitcoin miners will drastically increase. This will lead to reduction in earnings for existing mining pools.
It is necessary to have a consensus among the Bitcoin mining community if any important changes have to be made to the Bitcoin network. At the same time, there are a finite number of significantly large Bitcoin mining pools spread across the globe, leading to centralization. Centralization of mining pools delays the process of innovation and implementation of changes to the Bitcoin Blockchain.
In order to support the growing number of transactions and Bitcoin 2.0 applications the Bitcoin network may have to undergo few changes soon.