Bitcoin faces constitutional – and potentially existential – crisis

Bitcoin faces constitutional – and potentially existential – crisis
(Image: Courtesy Track Bitcoins at http://trackbitcoins.com/category/free-bitcoin-images/ )

[Ed. – Sometimes decisions have to be made.  Can Bitcoin’s libertarian “consensus” model get it done?]

The Bitcoin network is running out of capacity

The Bitcoin network processes transactions in units called “blocks,” which are created about every 10 minutes. To prevent malicious parties from clogging up the system with spam, the original Bitcoin software limited the size of each block to one megabyte, which corresponds to a few thousand transactions. When Bitcoin was created in 2009, that left plenty of room for growth.

But Bitcoin usage has been growing, bringing the network closer and closer to its maximum capacity. Right now, the network is only 30 to 40 percent full on average, but it sometimes gets congested during periods of high demand, causing delays for users. And if current growth continues, things could get a lot worse in the next year or two, as the network gets closer to 100 percent capacity. …

Changing the limit is easy — if everyone agrees

The limit is just a number in the Bitcoin software. If that number were changed to a higher value, the Bitcoin network would have more capacity.

The difficulty is that this only works if everyone agrees to raise the limit. The Bitcoin network is built on consensus. If some parts of the Bitcoin network raise the limit and others don’t, the network would be split in two. Having two competing versions of the Bitcoin network running simultaneously would be catastrophic. …

So this seemingly simple technical decision — whether to boost the Bitcoin network’s capacity or not — has divided the Bitcoin community into warring camps.

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