2013-11-30 Economist: Bitcoin under pressure

[solex]

Good timing with the magic $1000 mark. The Economist has finally produced an article on Bitcoin worthy of its reputation.

http://www.economist.com/news/technology-quarterly/21590766-virtual-currency-it-mathematically-elegant-increasingly-popular-and-highly

[1715262573]

1715262573

[EntropyExtropy]

I was talking with Glenn on twitter, mainly to commend this excellent article. The systemic strain on the blockchain right now due to sheer volume of transactions is the biggest barrier to widespread adoptance, but it's definitely something that is in the works right now to be fixed.

There are those that say, "well, payment processors will just accept zero-confirmation transactions and accept counter-party risk", which is one path that BTC can follow as it becomes more widely adopted by merchants, but as Glenn points out in the article, the danger posed by 'oligopolies' of mining cartels is the de facto centralization of Bitcoin, which poses the greatest risk in my opinion.

[BadAss.Sx]

And the main problem is that the new miners are way too expensive with the risk of a centralisation of Bitcoin. Have you checked out Friedcats his new mining farm?

[EntropyExtropy]

For this reason, I think the penult cryptocoin is going to be ASIC resistant. Can anything 'be' ASIC resistant? Doubtful, but ASICs will be a persistant threat to the decentralization of any crypto.

[solex]

I was talking with Glenn on twitter, mainly to commend this excellent article. The systemic strain on the blockchain right now due to sheer volume of transactions is the biggest barrier to widespread adoptance, but it's definitely something that is in the works right now to be fixed.

There are those that say, "well, payment processors will just accept zero-confirmation transactions and accept counter-party risk", which is one path that BTC can follow as it becomes more widely adopted by merchants, but as Glenn points out in the article, the danger posed by 'oligopolies' of mining cartels is the de facto centralization of Bitcoin, which poses the greatest risk in my opinion.

Glenn did a fantastic job.

There are hundreds of threads on this forum which detail the risks. I think the main areas to consider are:

a) Scalability with the block size constraint, bandwidth requirements for non-mining nodes.
b) Mining concentration with excessive hosted mining.
c) Point-of-sale limitations.

Each of these is soluble to a certain degree. I think it is very significant that the debate is shifting from Bitcoin "ponzi/scam" to "under pressure". This is constructive as real problems usually have real solutions, especially when the atmosphere is calmer. I remain very optimistic.

[Carlton Banks]

Well written piece, but it concentrates on the negatives (and positions itself as such from the outset of the article).

Where is the mention of the innovations? Instant, worldwide final payments? Multi-signature transactions or addresses? Wallets with keychains but no private key? (basically a one way drop box for virtual currency that cannot be opened by the person in possession of it)

For an organisation that often concentrates on genuine innovations, this is very one-sided. But as has been pointed out, it appears they have written an article that (for once) proves the journalist really understands the system (or at least can simplify a description provided by Mike Hearn without re-writing it into something nonsensical). I guess we can credit them with their earlier coverage of the Identity Protocol, that was a well judged scoop on the rest of the financial and technology press (pretty pathetic to consider that no-one EVER writes an article about some innovative feature of Bitcoin, this could be the only example of that happening so far as I'm aware)

[Mike Hearn]

I did push that angle with Glenn, but they have limited space and Bitcoin is a huge topic. That's OK. I'm sure we'll see articles about the more advanced features in future, especially one they... you know... actually get implemented

[Carlton Banks]

I did push that angle with Glenn, but they have limited space and Bitcoin is a huge topic. That's OK. I'm sure we'll see articles about the more advanced features in future, especially one they... you know... actually get implemented

Well, "Bitcoin under pressure" appears to be the angle they pushed, which (in fairness) is exactly what you get from reading the piece. But it's hardly the standout from Bitcoin recently.

Surely a magazine known for doing mini-sections (as the Economist is) should have done as such for cryptocurrency? You're right to say that Bitcoin is a big topic, and so a mini-section would be the ideal solution. Maybe they're waiting until they feel they have a really good grasp of the landscape to do it without expert help (lol). Maybe they really need an entire cryptocurrency correspondent.

[oakpacific]

I was talking with Glenn on twitter, mainly to commend this excellent article. The systemic strain on the blockchain right now due to sheer volume of transactions is the biggest barrier to widespread adoptance, but it's definitely something that is in the works right now to be fixed.

There are those that say, "well, payment processors will just accept zero-confirmation transactions and accept counter-party risk", which is one path that BTC can follow as it becomes more widely adopted by merchants, but as Glenn points out in the article, the danger posed by 'oligopolies' of mining cartels is the de facto centralization of Bitcoin, which poses the greatest risk in my opinion.

Glenn did a fantastic job.

There are hundreds of threads on this forum which detail the risks. I think the main areas to consider are:

a) Scalability with the block size constraint, bandwidth requirements for non-mining nodes.
b) Mining concentration with excessive hosted mining.
c) Point-of-sale limitations.

Each of these is soluble to a certain degree. I think it is very significant that the debate is shifting from Bitcoin "ponzi/scam" to "under pressure". This is constructive as real problems usually have real solutions, especially when the atmosphere is calmer. I remain very optimistic.

Multisigned fund escrowed with a payment processor could be a solution, still much superior to what we have today.

[notme]

And the main problem is that the new miners are way too expensive with the risk of a centralisation of Bitcoin. Have you checked out Friedcats his new mining farm?

I love Wednesdays.

[godislove]

How exactly is it "under pressure"? Can't Merkle trees as described in the white paper keep the blocks to under 4MB per year? Isn't the heavy computing power determined by the competition and not intrinsically required by the protocol which will lower the challenge if competition decreases as a result of lack of profit?  Can't very small transaction fees support heavy volume?

The above questions indicate how I thought database size, CPU power, and heavy volume were all taken care of.

[Mike Hearn]

Read the article - many things are possible but that doesn't mean they're actually implemented yet.