Do you want to see a financial revolution? Maybe it's time to abandon Bitcoin

[Samupaha]

As all of you probably know in this point, scalability issue of Bitcoin has become obvious. It has been known for years that Bitcoin can't handle much transactions. There have been some theoretical solutions but so far Bitcoin has been unable to implement any of them. We are in a situation where Bitcoin can't serve even its current userbase.

Even if Bitcoin Unlimited or Segwit will be implemented, they will bring only a little bit of help. In the long term Bitcoin needs much better solutions to be a real P2P currency.

So my question is this: Do you want to see a financial revolution?

It's clear that Bitcoin can't bring the revolution to us in its current form. To have a real revolution we need millions of new users. It's unclear when Bitcoin will be in a state it can actually serve them all. The current state is the best that Bitcoin can give us – and that is not enough.

I really want to see a better currency system in the world. Humankind needs it desperately. The longer people hang on to Bitcoin, the longer we have to wait something meaningful to happen.

Maybe Bitcoin can be a profitable investment... But from a financial revolution perspective, do we have any reasons to believe in Bitcoin? Why not just admit that another blockchain will be needed to scale to thousands (or even millions) transactions per second?

Sooner we ditch Bitcoin, sooner we can have our revolution.

[Possum577]

So my question is this: Do you want to see a financial revolution?

Of course, yes!

Abandoning Bitcoin will not bring revolution, it will end the revolution that Bitcoin has started.

I agree with you that any "revolution" size event needs millions of more Bitcoin users, but this does beg the question of what Bitcoin's revolution will truly be. Will it be as currency or as an asset class? (I believe it's the latter) It cannot be both.

The challenge of scalability isn't with handling increasing transaction sizes, it's the scale of adoption.

Transactions sizes merely (yes, merely) require larger plumbing, that's it. Adoption requires each of us to talk about bitcoin, introduce people to bitcoin, and ask businesses if they accept bitcoin.

[patrick.miller]

You don't understand Bitcoin. It's significance is an immutable ledger that can't be censored by a government. If it splits, then the experiment has failed. Not just for Bitcoin, but all crypto. It's worth $100 fees for one network that can serve this purpose. All other networks are currently under control of benevolent dictators.

Bitcoin Core has a backwards compatible update. Since Roger wants to split the network, everyone will dump Bitcoin.

Nobody will invest anymore time to making a truly decentralized system if the rich can buy the network.

If BU succeeds, then the experiment has failed. It might still be traded and used, but there will be no difference between an altcoin and BU at that point.

Then we will all just use separate altcoins because there's no point to trusting one network anymore.

Just my opinion.

[Rmcdermott927]

Why would another chain be needed? Bitcoin is already the most profitable, why not just. Make changes to the current chain to get a broader appeal, while keeping the current base.

[Thetamind]

While I believe bitcoin is a great thing, I believe that it is an error to believe that bitcoin is the one and only way. It's like a religion almost... There is room for other currencies, with better features and support. Bitcoin is the first of its kind, and its not as up to date as some others out there. I think bitcoin is the currency that brought the idea of crypto currencies to the world, and it will forever be cherished for that. However, I do not believe necessarily that bitcoin should be the one to lead the charge forward into the future, when it's loaded with problems and not really capable of handling the world using it as a payment system. I think it should be left alone, and make room for other currencies to bring people into it. I think the financial revolution that bitcoin has started, will not end with bitcoin, it will end with the masses adopting crypto currency in general. Like each country has it's own currency, there can be cryptos for many things. What if all hotels across the world used hotel cash that could transform the entire tourism industry? What if another united all video games and created video game cash that transformed the gaming industry.... this can be done for everything from governments, to insurance, to grocery and retail stores... Instead of gift cards, we can all pay with a crypto. I believe crypto currencies will change the world in many forms, in many industries. I believe it's a great hedge against fiat, and banks are going to have to jump on the crypto chain, if they want to evolve and remain relevant in an evolving world.

[patrick.miller]

Bitcoin is not the only way. But it's the only network that must be immutable. All others can be altcoins. If there is a chain split In Bitcoin, there's no point to using any crypto over another. They can all be co-opted at some point.

This is game theory, most won't get it.

[Samupaha]

Abandoning Bitcoin will not bring revolution, it will end the revolution that Bitcoin has started.

Why that would happen? There is huge demand for a real currency for the world. It doesn't go away when Bitcoin fails. Choosing a better currency will take the revolution to the next step.

I agree with you that any "revolution" size event needs millions of more Bitcoin users, but this does beg the question of what Bitcoin's revolution will truly be. Will it be as currency or as an asset class? (I believe it's the latter) It cannot be both.

If Bitcoin will become an "asset class" it means it has failed. It was meant to be "A Peer-to-Peer Electronic Cash System". It's right in the title of the whitepaper. I share that vision and that's why I want a better blockchain that can be used for currency.

The challenge of scalability isn't with handling increasing transaction sizes, it's the scale of adoption.

Why would people adopt something they can't use because it's so slow and expensive?

Transactions sizes merely (yes, merely) require larger plumbing, that's it. Adoption requires each of us to talk about bitcoin, introduce people to bitcoin, and ask businesses if they accept bitcoin.

"Larger plumbing" is not a trivial point. It's one of the most important requirements and Bitcoin can't do it. This problem has been very well known for ages but because Bitcoin lacks a formal governance system, it hasn't been able to actually implement anything.

I think it's time for everybody to admit this because the irrational belief for success of Bitcoin is hurting us.

[Samupaha]

You don't understand Bitcoin. It's significance is an immutable ledger that can't be censored by a government. If it splits, then the experiment has failed. Not just for Bitcoin, but all crypto. It's worth $100 fees for one network that can serve this purpose. All other networks are currently under control of benevolent dictators.

There are different perspectives to decentralization. It's one thing to decentralize decision making power, but another to decentralize the existence of the system. There could be a blockchain that is controlled by very few people but what is paying for block producers and nodes so well that it can't be shut down because there are so many copies of it around the world. That is the most important thing.

But to your point, I don't understand why people feel that Bitcoin has to be successful or else nothing is. So what if we end up with several different blockchains and currencies? If we have decentralized exchanges and multicoin wallets it doesn't matter that much.

If there is a chain split In Bitcoin, there's no point to using any crypto over another. They can all be co-opted at some point.

There are still a few obvious things that make sure that not all cryptocurrencies will become widely accepted.

• It a blockchain can't scale to millions of active users, it can't host a widely accepted currency.
• If the economic incentives for a blockchain have been designed badly, it won't work in the long run (Bitcoin has also this problem).

Most cryptocurrencies fail at one or both of these points.

[Samupaha]

Why would another chain be needed? Bitcoin is already the most profitable, why not just. Make changes to the current chain to get a broader appeal, while keeping the current base.

The problem is that the current blockchain can't be updated. People have been trying but nothing is happening. Not even now when the transaction backlog has grown way too big. This is a huge disaster (from the revolution perspective).

Actually there is a way of keeping the current userbase while launching a new coin. It could be distributed to current bitcoin owners in the beginning.

[patrick.miller]

There are different perspectives to decentralization. It's one thing to decentralize decision making power, but another to decentralize the existence of the system. There could be a blockchain that is controlled by very few people but what is paying for block producers and nodes so well that it can't be shut down because there are so many copies of it around the world. That is the most important thing.

Digital currencies are just hashes. They aren't tangible or backed by anything other than the network of users. They aren't that interesting. Bitcoin is interesting because it is a pure proof-of-work network that cannot be co-opted.

But to your point, I don't understand why people feel that Bitcoin has to be successful or else nothing is. So what if we end up with several different blockchains and currencies? If we have decentralized exchanges and multicoin wallets it doesn't matter that much.

Yes it absolutely matters. Why would you hold your wealth in a bunch of cryptocurrencies that will fluctuate wildly in value depending on which way the wind is blowing? This is bad for business and bad for savers. Very few people will want to hold money in a crypto that tomorrow nobody wants, or could be split and turned into something else, or easily co-opted.

There are still a few obvious things that make sure that not all cryptocurrencies will become widely accepted.

• It a blockchain can't scale to millions of active users, it can't host a widely accepted currency.
• If the economic incentives for a blockchain have been designed badly, it won't work in the long run (Bitcoin has also this problem).

Most cryptocurrencies fail at one or both of these points.

Blockchains can't scale to millions of users, on-chain. Distributed ledgers stored in data centers can, but not blockchains. There's no point to using proof-of-work if we move to data centers, and we might as well just go right back to using a redundant database with hash signing. We might as well just go back to using banks.

Lightning network and sidechains can scale Bitcoin's decentralization to millions of users, but unfortunately, there is another side here that would prefer to destroy the decentralization and immutability of the base protocol, in order to push an agenda.

[Samupaha]

While I believe bitcoin is a great thing, I believe that it is an error to believe that bitcoin is the one and only way. It's like a religion almost... There is room for other currencies, with better features and support. Bitcoin is the first of its kind, and its not as up to date as some others out there. I think bitcoin is the currency that brought the idea of crypto currencies to the world, and it will forever be cherished for that.

Yeah. Satoshi is a genius and has my utmost respect. He proved that this kind of system is actually possible in the real world.

However, I do not believe necessarily that bitcoin should be the one to lead the charge forward into the future, when it's loaded with problems and not really capable of handling the world using it as a payment system. I think it should be left alone, and make room for other currencies to bring people into it. I think the financial revolution that bitcoin has started, will not end with bitcoin, it will end with the masses adopting crypto currency in general.

Exactly, this is the point where Bitcoin brought us and now we have to take the next step.

[Samupaha]

Yes it absolutely matters. Why would you hold your wealth in a bunch of cryptocurrencies that will fluctuate wildly in value depending on which way the wind is blowing? This is bad for business and bad for savers. Very few people will want to hold money in a crypto that tomorrow nobody wants, or could be split and turned into something else, or easily co-opted.

I consider Bitcoin to be still very high risk currency, it has many very clear problems. It will continue to fluctuate for many years. I can't see any realistic scenario where it becomes something that savers can trust.

If you want a currency that holds the value, you need to create a smart contract for that. But even that can fail and lose its value in a moment if the underlying blockchain has problems. What you are asking for is pretty much impossible for now.

Blockchains can't scale to millions of users, on-chain. Distributed ledgers stored in data centers can, but not blockchains. There's no point to using proof-of-work if we move to data centers, and we might as well just go right back to using a redundant database with hash signing. We might as well just go back to using banks.

Well, I don't see much point using POW anyway. It's slow and expensive. If a blockchain becomes valuable, it has to pay a lot for miners so that it will be expensive to attack it. When a lot of money is paid for miners, they will build highly specialized data centers for mining operations. That is something you can't move to another place if there is a threat. It's not hard to see that Bitcoin mining will become highly centralized if Bitcoin becomes successful. Then the hashing centers will be an easy target for governments.

At least with a POS blockchain you can move the block producing software easily from one datacenter to another, anywhere in the world. When internet connections become faster and cheaper, computing becomes cheaper, and so on, I don't think it will be a big problem.

Lightning network and sidechains can scale Bitcoin's decentralization to millions of users

Sidechains might be the way to go, but LN is quite suspicious. Doesn't it mean that bitcoin transactions become more centralized? There will be a few hubs that process most of the transactions? Hubs become like banks and can decide what transactions they process?

[patrick.miller]

Well, I don't see much point using POW anyway.

If you don't see the point of PoW, then everything else I say will not matter.

[Samupaha]

If you don't see the point of PoW, then everything else I say will not matter.

I have seen more and better arguments against POW than for it. Especially from the financial revolution perspective it seems that POW blockchains are really high risk projects.

If you have any good arguments for POW, I'd like to hear them. But probably I've seen them all already.

If we didn't have any real cryptocurrencies and all blockchains were theoretical (but we would have the knowledge of all different kind of possibilities), nobody would start by implementing POW blockchains. At most somebody could do one just because of curiosity, but nobody would believe they could be a platform for a financial revolution.

Currently most arguments for POW are just explanations invented afterwards. Because people have been defending Bitcoin so long and they have invested time and money to it, they can't admit it won't work. So their brains come up with explanations how POW is the only way, while in real life it's more and more clear that POW is way too slow and expensive.

[Possum577]

First, it's going to be difficult to match the organization of your response.

Second, we're all friends here, right?

Third, great questions...I'll address of few of your responses.

Why that would happen? There is huge demand for a real currency for the world. It doesn't go away when Bitcoin fails. Choosing a better currency will take the revolution to the next step.

You sure about that? There are multiple competitors to Bitcoin now, yet none offer a larger market cap or even greater momentum and attention than bitcoin. I like the idea that there are fall backs, but if every bitcoiner loses their wealth when bitcoin fails it doesn't bode well for any crypto-currency.

If Bitcoin will become an "asset class" it means it has failed. It was meant to be "A Peer-to-Peer Electronic Cash System". It's right in the title of the whitepaper. I share that vision and that's why I want a better blockchain that can be used for currency.

I agree that was Satoshi's intent. But we need to face the facts. According to Blockchain.info the current market cap for bitcoin is about $18.7b and the daily transaction volume straddles $100m. That transaction volume represents the amount or share of the bitcoin market being used as currency on any given day. That's about .5% (half of a percent) of the market cap that's used for currency. Bitcoin is already a store of value, i.e., an asset class. (source: https://blockchain.info/charts/trade-volume)

Why would people adopt something they can't use because it's so slow and expensive?

"Larger plumbing" is not a trivial point. It's one of the most important requirements and Bitcoin can't do it. This problem has been very well known for ages but because Bitcoin lacks a formal governance system, it hasn't been able to actually implement anything. I think it's time for everybody to admit this because the irrational belief for success of Bitcoin is hurting us.

I meant merely in the sense that the problem is known and specific and simple to understand. I realize it may not be simple to solve, but I'm not well educated in how it should or could be solved. Want to educate me?

[Samupaha]

Second, we're all friends here, right?

Yeah, hopefully! I'm not interested in arguing just for the sake of arguing. I'm genuinely puzzled why people still have so much faith in Bitcoin. Even now when it's clear for everybody that Bitcoin has serious scaling issues. That can't be denied anymore.

Why that would happen? There is huge demand for a real currency for the world. It doesn't go away when Bitcoin fails. Choosing a better currency will take the revolution to the next step.

You sure about that? There are multiple competitors to Bitcoin now, yet none offer a larger market cap or even greater momentum and attention than bitcoin. I like the idea that there are fall backs, but if every bitcoiner loses their wealth when bitcoin fails it doesn't bode well for any crypto-currency.

Yeah, I don't deny that there will be problems when bitcoin price eventually drops. Hopefully by then the most enthusiast cryptocurrency activists have realized what is going to happen and have sold when bitcoin still has a high price. And yes, times will not be good for cryptocurrency revolution, but it's only temporarily. There is still so much demand for a real uncensorable currency that some of the alternatives will substitute what is lost with Bitcoin.

Bitcoin has still some momentum because people haven't realized how technically inferior it is. But it's really hard to see any scenario where this momentum can go on if only a handful users can actually make bitcoin transactions. When people realize that bitcoin can't be used in everyday situations, the bubble will burst.

If Bitcoin will become an "asset class" it means it has failed. It was meant to be "A Peer-to-Peer Electronic Cash System". It's right in the title of the whitepaper. I share that vision and that's why I want a better blockchain that can be used for currency.

I agree that was Satoshi's intent. But we need to face the facts. According to Blockchain.info the current market cap for bitcoin is about $18.7b and the daily transaction volume straddles $100m. That transaction volume represents the amount or share of the bitcoin market being used as currency on any given day. That's about .5% (half of a percent) of the market cap that's used for currency. Bitcoin is already a store of value, i.e., an asset class. (source: https://blockchain.info/charts/trade-volume)

Given that bitcoin price is very volatile, I call it high risk speculative investment. People don't own it because they think it's safe way to store value – they own it because they believe that the value can multiply several times and they make a lot of money. That is and will be the nature of blockchain economies for a long time.

Why would people adopt something they can't use because it's so slow and expensive?

"Larger plumbing" is not a trivial point. It's one of the most important requirements and Bitcoin can't do it. This problem has been very well known for ages but because Bitcoin lacks a formal governance system, it hasn't been able to actually implement anything. I think it's time for everybody to admit this because the irrational belief for success of Bitcoin is hurting us.

I meant merely in the sense that the problem is known and specific and simple to understand. I realize it may not be simple to solve, but I'm not well educated in how it should or could be solved. Want to educate me?

Higher level problem is the lack of governance system. Bitcoin is a traditional open source project where nobody has any official authority. That means the decision making process is very easily stagnated. People have lots of ideas, but none of them can be implemented because the system can't make a decision which one to choose. That's why Bitcoin is still lacking any meaningful decisions over how to actually handle the scaling. The problem has been known for years but they can't decide anything even now when everybody is finally suffering because of it. I don't think this can be solved in an easy way. Probably the best way is to just choose alternative blockchain or create a new one.

Middle level problem is bad economic incentives for proof of work. Bitcoin spends an awful lot of money for mining. If the value goes really high, that will cause serious problems because suddenly Bitcoin will use really big proportion of all electricity in some areas (where the electricity is cheap). Governments might want to shut down the mining operations, environmental organizations might attack against bitcoin users globally, etc.

Lower level problem is the acute scaling issue. If Bitcoin doesn't scale, it can be used only by a very small group of people (who are willing to pay the most). It means that all other people who want to use a cryptocurrency will choose some other alternative. After they have been using something else for a while, they start to think "why go back to Bitcoin?" The alternative is much more user-friendly, cheaper and faster. Then the big money investors realize that nobody is using Bitcoin anymore and everybody is using something else, and that's where the investment money will follow.

I don't think there exists a perfect blockchain currently. Dash and Bitshares have good governance systems. But Dash is a POW and Bitshares has toxic community (even with a good governance system they can't cooperate). Steem has probably the most ambitious plans for scaling so that's why it's my current favourite, even without a perfect governance system.