According to Mike Hearn, a Bitcoin Developer in the news, “…despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly. The fundamentals are broken…” He goes on to describe the problems with the ability of the system to handle the growth in the number of payment transactions and the developer community’s inability to reach a consensus on the fundamentals of the system’s design. Basically the dispersed nature of the Bitcoin system has allowed some large players to avoid changes needed to make the system accessible to more people. As a result the Bitcoin system struggle to function as a reliable payment system.
The Bitcoin system utilizes a huge amount of resources encrypting the transaction history. This was the fundamental concept behind Bitcoin: (1) make sure money can’t be “spent twice” and, (2) avoid handling disputes by making the transaction history unchangeable via supercomputer encryption. So, is it any wonder that now that the system is becoming popular that the largest, most powerful Bitcoin miners have more sway on how many transactions the system will allow per second? Bitcoin fundamentals say that every new transaction needs to be added to the list of past encrypted transactions and then encrypted again!
Needless to say, It is possible to process and keep track of transactions without blockchain encryption. Obviously, Visa, Paypal, and all other payment processing companies process transactions without encrypting the the transactions that occur every ten minutes. Placing that burden on payment processors, called miners in the Bitcoin system, will obviously make their costs higher than competitors that don’t need to upgrade their supercomputers at the rate of Moore’s Law simply to continue to function.
It is time, once again, to reconsider what features an alternative online currency should have. Bitcoin has proved that it is possible to get millions of people to trust a alternative currency system. That is quite a feat. What if the system was based on trust between individuals in the market? Ultimately, a payment system is there to process and track the exchange of a currency between individuals who trust each other enough to be transacting. Rather than encrypting the ledger why not make it easier to access and read? If the people exchanging actually trust each other then maybe there is no need to hide anything.
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