What would a bitcoin collapse look like?

[bornil267645]

Collapse. It seems to be a word that is becoming more and more relevant in our everyday lives. The economic collapse of Greece. The collapse of the Petrodollar. The collapse of our civil liberties and constitutional rights. And the upcoming collapse of the U.S. Dollar. There’s a lot on our plate right now, but why not lay all the cards on the table? What would happen if Bitcoin collapsed? This possibility is much closer than you think, and efforts to avert it are underway, but what if nothing was done? Let’s pretend everyone just acted like everything’s peach fuss with Bitcoin and its current block chain trajectory. All the signs were ignored, and more and more people jumped on the Bitcoin bandwagon. Here’s a glimpse into one version of the future.

A Bitcoin Collapse is Very Possible

If all signs were ignored, that the Bitcoin Core capacity was ignored, in the very initial stages of collapse, you wouldn’t notice a thing. Your normal Bitcoin transaction would collect in a “memory pool”, where transactions go before appearing in the block chain. These transactions would be alive in a node’s memory only. The first sign of trouble would be the transaction times. Once the core capacity reaches 80%, about half of the transactions would double in confirmation time to 20 minutes. As capacity approaches 100% full, the transactions would start to create a backlog, and this is where it would get tricky.

The Bitcoin core is not designed to handle a backlog of transactions. The backlog creates a memory queue until the Bitcoin node does one of three things. Option one, the node slows down dramatically under the pressure. Option two, the node crashes or collapse when it tries to find enough memory and fails to do so. Or option three, the node is killed by the operating system kernel. The owner of the core needs to manual restart it, and notice that it has collapsed in some form. This takes time. While this is going on, Bitcoin wallets, not knowing the system’s internal strife, keeps sending in new transactions at up to seven per second. Like having three people stand on top of you, with a football team heading your way. Not good.

Would rebooting the node clear the memory and solve the problem? Yes and no. It creates brand new problems like double-spending. And the wallets will still keep re-doing the transactions until they get confirmations, so the problem will repeat soon enough, only now double-spending is on the menu, and the backlog will worsen. Now, the block size is at 1 MB, but this scenario did happen at the 250KB block size, two years ago. The solution was to increase the “soft block size limit” of blocks. There were a lot of angry people and wayward transactions, and this was with far fewer people in the Bitcoin network. It’s best not to replicate this after every two years of growth.

You could increase the fee you pay per transaction, but this also would create a wormhole in the opposite direction, exacerbating the Bitcoin collapse problem. You pay a little bit more, and the next guy pays a little bit more, and you don’t get a confirmation, so you redo your transaction at a higher price. You are just throwing spaghetti at a wall. People worldwide are generating more and more transactions to get confirmations, and nothing is getting done but a bigger and bigger backlog, destroying more and more nodes under the pressure.

Do you think the mainstream media might get tipped off that Bitcoin is having rampant fee escalation, double-spending worldwide, confirmations taking hours if at all, and internal systems crashing throughout the block chain? Like Bitcoin needs more bad publicity? The Bitcoin developers look bad, the currency would look bad, people would start to lose faith in the protocol. People start to sell Bitcoin, head into “cold storage” to sell dormant BTC, and meanwhile the backlog gets worse and worse.

This is what could happen if nothing is done, according to Mike Hearn, potentially turning Bitcoin into the MySpace of digital currency. And if Bitcoin goes down, it likely takes every altcoin down with it. Bitcoin businesses, trying to take it mainstream, would fold, or downsize, and move onto the next big thing. The “Network Effect”, the venture capital, and most importantly the belief in the protocol all would suffer death blows.

This upcoming, and fairly simple problem to solve is a good sign. It’s a sign that Bitcoin is continuing to grow, as expected. This is the kind of problem owners, and users should want to have. How to handle Bitcoin’s future growth. Visa does over 200 transactions per second. PayPal about 125. Bitcoin is stuck at seven, and it’s time to make a move forward. More transactions per second mean more people can use Bitcoin quickly and easily.

This Bitcoin collapse scenario can be averted with Bitcoin Core upgrades in the near future. You know what they say. An ounce of prevention beats a pound of cure. Bitcoin masterminds like Mike Hearn and Gavin Andresen are on the case and I, for one, am thankful for their proactive approach to Bitcoin’s overall protection. It’s a tough job, but someone’s got to do it.

[AtheistAKASaneBrain]

It's not going to collapse, basically because we have billonaires on board that aren't simply going to sit back and see how it crashes. As for the hard for for the upcoming 20 MB, only stuck up retards will not be moving to the objectively improved 20 MB block size, the rest will be a bunch of autist running deprecated software, just like there are pseudo abandoned forks that only a few people run for some silly reason, while the rest of the people move on with the times and adopt the better software. We'll get through this, this is nothing.

[Amph]

why people think that bitcoin is in the way to die/collapse or whatever, because of the recent dump? did you know that adoption is much bigger now than it ever was for bitcoin? there is no reason why bitcoin should collapse now instead of collapsing, let's say in 2012 or even 2013

price matter until a certain point, there are other factors to take in consideration, before you scream some death sentences...

[unsoindovo]

i think it could be...
but not will be.
bitcoin was given up for dead a lot of times.

sometime i  connect to this site to check the counter:

http://bitcoinobituaries.com/

[BTCevo]

The Bitcoin developers look bad, the currency would look bad, people would start to lose faith in the protocol. People start to sell Bitcoin, head into “cold storage” to sell dormant BTC, and meanwhile the backlog gets worse and worse.

How did you know that developers look bad? I dont think there is some developer to control the movement of this bitcoin. I guess it is based on the market of the bitcoin volume so you can't judge them and there is still so much people invest in this bitcoin because they believe the price will going raise again. I think your statement too much false in it

[randy8777]

why people think that bitcoin is in the way to die/collapse or whatever, because of the recent dump?, did you know that adoption is much bigger now than it ever was for bitcoin? there is no reason why bitcoin should collapse now instead of collapsing, let's say in 2012 or even 2013

price matter until a certain point, there are other factor to take in consideration, before you scream some death sentences...

people only see what they want to see. with a low price there are loads of bitcoin will fail nonsense threads. that shows how little their knowledge about bitcoin is. or they are bears.

[CryptoTrout]

just look at some radioshack charts

[Gyfts]

Very interesting, I have questions though. Currently, it doesn't seem like Bitcoin is running at overcapacity, so what makes you think it'll ever go to that point? I feel like the growth of Bitcoin is at a steady increase, yes, but not exponential to the point we aren't going to get confirmations and we create a memory backlog. I get it's possibly, more on the unlikely side in my opinion. Hypothetically speaking, if we were to get to a point of backlogs and confirmations taking forever to where we have a "bidding war" just to get our transactions confirmed, we can kiss BTC goodbye and move on to the next revolutionary technology in the realm of the internet.

[Kprawn]

Failure due to problems with the application of the protocol, can be fixed within a couple of hours... It's not a train smash at all.

The driving factor behind the failure of Bitcoin or any other crypto currency for that matter, is the media {Shills} and over regulation from governments.

People tend to use the "collapse" word to easy... Everytime the price drops with $20 ....you get the "collapse" word being splashed around in the media. 

For Bitcoin to collapse... all trade should stop.. merchants must stop accepting bitcoin as a payment method and miners should stop mining. 

[tinof]

Price collapsed has already happened when central bank of china put a soft ban on it.

[odolvlobo]

Collapse...

Cats and dogs living together!

Whatever. There are plenty of doomsday scenarios and none are very likely. You seem to think that every potential problem has no solution. That's just being ignorant.

[Q7]

Well people have been saying the same thing ever since bitcoin started and year after year people kept saying the same thing. If it were to collapse it would have happened years ago and not right now. Put aside coding weaknesses, for me, i see a fiat system which is centralized and heavily manipulated to have higher chance of a collapse rather than bitcoin.

[deisik]

Well people have been saying the same thing ever since bitcoin started and year after year people kept saying the same thing. If it were to collapse it would have happened years ago and not right now. Put aside coding weaknesses, for me, i see a fiat system which is centralized and heavily manipulated to have higher chance of a collapse rather than bitcoin.

A fiat system can collapse only when a state which emits that fiat collapses. In fact, the devaluation of national currency is usually taken on as one of the last resort measures to postpone an impending collapse of a state (e.g. due to warfare). Regarding what bitcoin collapse could look like, it is rather a question of bitcoin bubble collapse, not the coin itself or its concept. But we have already seen one, so nothing new...

[Troonetpt]

It has been Collapse many times, from $1200+ to $200-, it definitely a Collapse. And nothing happened, it just rise again.

[BillyBobZorton]

It has been Collapse many times, from $1200+ to $200-, it definitely a Collapse. And nothing happened, it just rise again.

This, the collapse already happened, and guess what, it's holding on just fine. Unless by collapse you mean price going to literally 0, which is a non issue since that will not happen.

[spazzdla]

A popular fork is created.. half the exchanges move to it.. half don't.. most people don't get what's going on panic sell.. BTC and BTC2 collapse into the darkness.

[BTCevo]

It has been Collapse many times, from $1200+ to $200-, it definitely a Collapse. And nothing happened, it just rise again.

This, the collapse already happened, and guess what, it's holding on just fine. Unless by collapse you mean price going to literally 0, which is a non issue since that will not happen.

Yes it had been collapsed before and now bitcoin will start come back to their real price, that is about $1000 per bitcoin. So before the price is going to 0 I guess that is not a bad thing to invest it for now, besides I dont think bitcoin will go 0 for the meantime

[NorrisK]

People that shout out that it is collapsing probably sold out to fiat and hope to get enough others to do so as well so they can buy back at a lower point.

Maybe a good shake up is needed, price of sub 100 would be interesting and really test bitcoiners.

[Xenoph0bia]

why people think that bitcoin is in the way to die/collapse or whatever, because of the recent dump? did you know that adoption is much bigger now than it ever was for bitcoin? there is no reason why bitcoin should collapse now instead of collapsing, let's say in 2012 or even 2013

price matter until a certain point, there are other factors to take in consideration, before you scream some death sentences...

Yeah You are Right. Even I dont See that bitcoin is collapsing. Its only the value of bitcoin has gone down in the recent time and people already started to believe that bitcoin is dead. Thanks to media who are experts in spreading the rumors related to bitcoins and people just gets carried away with it.

[stromma44]

It has been Collapse many times, from $1200+ to $200-, it definitely a Collapse. And nothing happened, it just rise again.

This, the collapse already happened, and guess what, it's holding on just fine. Unless by collapse you mean price going to literally 0, which is a non issue since that will not happen.

Yes it had been collapsed before and now bitcoin will start come back to their real price, that is about $1000 per bitcoin. So before the price is going to 0 I guess that is not a bad thing to invest it for now, besides I dont think bitcoin will go 0 for the meantime

I think yes it is the best time to invest as the prices have gone down so the real investors who are looking for sound investment i think they should go for it right now. And bitcoin will come back very strongly and will reach to the next highest level in future its just a matter of time.