There have been disagreements in the bitcoin development community about how to deal with scaling. These have resulted in a number of currency forks or proposed forks in the recent past, including
Here’s what I think would have to happen for a bitcoin fork to be successful:
- It can get itself onto most of the exchanges.
- It solves enough of the core bitcoin problems that people will actually start using it.
- Wallets are ubiquitously available (web wallets, full node wallets, mobile, …).
- It gets the Bitcoin Brand(TM), and all the marketing clout that brand carries.
There are a number of problems that bitcoin-core has right now:
- The scaling is absolutely abhorrent.
- Transactions with default wallet fees get stuck in limbo. Those fees are no longer pennies or fractions of pennies, but are dollars.
- A full node wallet requires a massive amount of space.
- It uses a public ledger without a built in mixer, so isn’t really anonymous, especially when the exchanges that so many transactions are occurring at have extensive personal info (drivers licences, passports, …).
- Massive energy cost to maintaining the network.
Long term I think many of these issues are disastrous, but the scaling and fees are the killer issues, and I mean that literally. If a solution to those problems is not incorporated into bitcoin core, then people will be forced to completely abandon bitcoin, and it will be left entirely to speculators (and then proceed to crash, after which it may become usable again for a while.)
Here’s a recent example that illustrates this. I tried to send $150 USD equivalent to the Scott Horton show, which is hands down the most informative foreign policy show in existence. I’d previously sent him a $200 USD equivalent donation in bitcoin (and got a listen and think audio lifetime subscription in exchange!), but I thought a signed copy of his book would be awesome, so decided to send some more.
- At the time I did this, the market price of bitcoin was around $15k USD/bitcoin, so this was about a 10mBTC (0.01 BTC) transaction.
- The wallet that I used to send the coin (electrum, which doesn’t require a full node) included a default fee of 0.392 mBTC (0.000392 BTC = ~$5.88 USD).
After 19 hours, this transaction still has zero confirmations, and my wallet is now showing this transaction as “Low Fee” with a hazard sign:
A 4% fee on $150 is no longer enough to successfully yield a single bitcoin transaction confirmation after almost a full day! At this rate, will my attempted send to the Scott Horton show ever go through? Have I lost the bitcoin I attempted to send?(*) I don’t think there is any way to bump up the fee on an existing transaction attempt to force it through (**).
Bitcoin has been portrayed as a low fee system that will replace extortionist money transfer systems like Western union, kill the banks that are in bed with governments, enable billions of unbanked access to world finances, and facilitate micro-transactions for small services. It certainly hasn’t met with these expectations if somebody fully banked can’t even send $150.
The days of being able to sent tips with bitcoin for services that seem desirable appear to be in the past. I happen to have a tips page on this blog. I’ve renamed it to ‘cryptocurrency tips’ from ‘bitcoin tips’, since bitcoin now appears to be effectively non-functional.
(This doesn’t change the fact that a blog about math, physics, programming and random incoherent ramblings isn’t monetizable, so nobody will ever likely sent me enough bit or alt coin to even cover hosting fees, let alone the academic fees that have been associated with a lot of the content).
I have had at various points some altcoin wallets including:
- dashcoin (was darkcoin)
I currently only have dashcoin and litecoin wallets with non-zero contents (and haven’t fired up my litecoin wallet in a long time … it’s sitting on a VM unused with a token amount in it.)
These coin implementations have a range of features (privacy, transaction rates, low fees, ASIC resistance, …). I don’t think any of them deal with blockchain archiving that will be required for continuous future use, and think that it is fundamentally broken that a full node wallet cannot download only a working portion of the blockchain (or grab other subsets on demand). However, if the coin implementation doesn’t handle scaling and low fees, I think it is going to be doomed. I’m not seeing signs that bitcoin core is taking those issues seriously.
Footnotes and edits.
This particular transaction has now disappeared from my electrum wallet, although it is still visible on the network.
It appears that whether or not a transaction truly expires also depends on all the possible mining clients. To protect myself against the Scott Horton show being paid twice should I resubmit my transaction with a higher fee, I’d have to generate a new wallet, and transfer all my funds into that.
It appears there are mechanisms to reset fees for transaction if they aren’t confirming, but they are wallet specific. The electrum 2.8 wallet software I was using did not have such a mechanism, and the transaction itself disappeared from the electrum history after about 24hrs. I upgraded my wallet to electrum 3.0.2, and the transaction showed up again, after which I was able to initiate a ‘child pays for parent’ transaction sending an additional fee (0.00178749 == $28 USD, another 18% fee, bringing the total fees to over 22%) to force my initial donation through.
[The electrum “child pays for parent” processing leaves a lot to be desired. After submission, that dummy transaction does not show in the transaction history, and there is no indication on the original transaction, that it has been made. I only knew that it worked the next morning, when my original transaction had confirmations.]
The moral of the story is that bitcoin can’t be used for small transactions anymore. If you send any or try to cash it in, you better make sure your wallet software is up to date, and setting fees high enough that the transaction will be processed. In the case of my donation to the Scott Horton show, where I asked for his $50 and $100 donation perks (signed copy of his book, and a QR silver respectively), despite paying additional fees, I may have gotten the better deal in the transaction, as I get two tangible items for bitcoin that is getting hard to spend (even if you can find somewhere that accepts it).
I don’t think it’s a surprise that dashcoin (and probably other altcoins) have gone up relative to bitcoin 25% in the last day, since bitcoin has hit this peak. A lot of the alt-coins can be spent and the fees aren’t exorbitant. It remains to see how some of these altcoins will do under the network pressure recently imposed on bitcoin.