Known Problems with Bitcoin

[daisotope]

Hi All,

First time poster here! I've recently been thinking about the intrinsic challenges that Bitcoin may have at a protocol level if it ever became the dominant currency for some society. Some often quoted problems are:

- deflationary
- slow transaction times
- environmental impacts of growth in mining
- 1Mb fixed block size

Are there any other problems that are less obvious?

Cheers!
- Daiso

[Iwilechu]

I'd dispute the assertion that transaction times are slow, given that it probably takes at least 24 hours, usually more, for an interbank transfer to make its way through our decrepit clearinghouse system.

The 1MB block size limit is also something that can be changed in a future update to the protocol.

Outside of that, the 51% vulnerability is probably the most apparent weakness of the system.

[daisotope]

I'd dispute the assertion that transaction times are slow, given that it probably takes at least 24 hours, usually more, for an interbank transfer to make its way through our decrepit clearinghouse system.

I generally agree with this. However, I've heard concern that Bitcoin may be too slow for in-person purchases.

The counter-argument is usually that credit cards allow charge-backs for at least up to 30 days. It may be that the current credit card system only works because merchants trust that credit card companies will reasonably protect them from fraud. I'm not 100% convinced one way or the other, any insight?

[dwdoc]

When most bitcoins have been mined it will eventually become impractical to generate high enough transaction fees to incentivize the hashing that maintains network integrity and prevents a 51% attack.  

[MicroGuy]

Are there any other problems that are less obvious?

Well its original developer abandoned the project and disappeared before perfecting a 51% attack defense, something Goldcoin developers have just announced accomplishing today! https://www.gldtalk.org/index.php?topic=1748.0

Once the word of this innovation leaks the price is going to skyrocket!      




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[daisotope]

When most bitcoins have been mined it will eventually become impractical to generate high enough transaction fees to incentivise the hashing that maintains network integrity and prevents a 51% attack.  

Yikes, I haven't heard this before. Has anyone done the math behind this? is it 100% certain? I will do the math myself if not.

[odolvlobo]

Some often quoted problems are:
- deflationary
- slow transaction times
- environmental impacts of growth in mining
- 1Mb fixed block size

It is not clear that any of these are or will be problems.

Deflationary
Its a feature, not a problem

Slow transaction times
Perhaps too slow for risk-free face-to-face transactions, but that is not necessarily a problem, and it can probably be solved if it is.

Environmental impacts of mining
The amount of energy spent on mining will generally always be less than the block reward plus transaction fees. The block reward halves every 4, and so will the energy consumed.

1Mb fixed block size
I think it should be increased now before it is too late. Others do not. Either way, it is not a problem.

[Bobbydiggital]

When most bitcoins have been mined it will eventually become impractical to generate high enough transaction fees to incentivise the hashing that maintains network integrity and prevents a 51% attack.  

Yikes, I haven't heard this before. Has anyone done the math behind this? is it 100% certain? I will do the math myself if not.

yep i heard that as well, but they were talking about rewarding people in some other ways

[wasserman99]

indeed, these are issues. blockchain bloat and is certainly an issue, we need ways to prune the chain without sacrificing security. not sure how that is done.

[dwdoc]

When most bitcoins have been mined it will eventually become impractical to generate high enough transaction fees to incentivise the hashing that maintains network integrity and prevents a 51% attack.  

Yikes, I haven't heard this before. Has anyone done the math behind this? is it 100% certain? I will do the math myself if not.

http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be

This is perhaps the biggest flaw in Bitcoin at the moment: once mining rewards end there is no direct linkage between the amount of hashpower needed to secure the network and the incentive to mine.

[skycoin]

There are still many challenges to be resolved by the community.

Miner cartels are becoming greater threat than 51% attack.  Miners need 2 million dollars a day to pay electricity bill. When block rewards decrease miners need higher fees. Miners cant make money unless they reject low fee transactions.

Some of the greatest problems facing Bitcoin
- Governments can determine who is using Bitcoin from IP data. Some governments do not want citizens to have access to technologies like Bitcoin. The identities of the people running the Bitcoin client are not protected.
- Bitcoin only supports 8 transactions/second and Visa's network clears 2,000 transactions/second
- Bitcoin transactions are too easy to track. Bitcoin does not offer the privacy required for widespread use in many countries.

These problems are being worked on.

[Argwai96]

When most bitcoins have been mined it will eventually become impractical to generate high enough transaction fees to incentivise the hashing that maintains network integrity and prevents a 51% attack.  

Yikes, I haven't heard this before. Has anyone done the math behind this? is it 100% certain? I will do the math myself if not.

http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be

This is perhaps the biggest flaw in Bitcoin at the moment: once mining rewards end there is no direct linkage between the amount of hashpower needed to secure the network and the incentive to mine.

if mining makes it that far it means bitcoins took off, which means they will be worth incredible amounts of money by then.

[dwdoc]

When most bitcoins have been mined it will eventually become impractical to generate high enough transaction fees to incentivise the hashing that maintains network integrity and prevents a 51% attack.  

Yikes, I haven't heard this before. Has anyone done the math behind this? is it 100% certain? I will do the math myself if not.

http://bitcoin.stackexchange.com/questions/876/how-much-will-transaction-fees-eventually-be

This is perhaps the biggest flaw in Bitcoin at the moment: once mining rewards end there is no direct linkage between the amount of hashpower needed to secure the network and the incentive to mine.

if mining makes it that far it means bitcoins took off, which means they will be worth incredible amounts of money by then.

They will be worth nothing if you cannot prevent a 51% attack.

[Sigmoid]

They will be worth nothing if you cannot prevent a 51% attack.

Yep. Once the system is compromised, both the "crypto" and the "coin" evaporates out of cryptocoin. It will just be worthless random numbers on an HDD somewhere.

Most miners are looking at Bitcoin as a way to make some quick money. The lifespan of newly designed rigs is counted in months. Have no doubt about it, once the rewards drop, hashing power will dry up like a desert riverbed after rain.

The system looks inherently broken, and there doesn't seem to be a way of fixing it. Litecoin didn't do much to address any of this, Peercoin was an interesting idea, but it's eventually a dog with its own fleas.