Isn't Bitcoin capped to 10TPS and Ethereum to 25TPS? How is this technology going to handle real-time large volume of payments without reducing latency in the order of a few magnitudes? If this is not addressed, *coins are just an experimental vaporware.
It's pretty funny. Almost all the investment interest in Bitcoin and Ethereum isn't about the technology's potential. It's all just speculation on the current cryptocurrencies as commodities.
Just about everyone asking "should I buy Bitcoin?" is doing so because they want to know how high it will go. They don't really give a shit whether the technology has the potential to disrupt centrally planned economies.
Bitcoin being worth $5,000 right now is all about not being the last guy holding the bag when the value collapses again...
Speculating on the price growth is literally speculating on several things:
1. The technologies future potential.
2. Investing based on the realized potential we have seen in the last year.
3. Speculating that the technology will more widely adopted.
Just because its a currency doesn't mean it's not going thru the technology adoption cycle, like the internet did and the smart phone did.
More people owning bitcoin means more demand means higher price in the face of relatively fixed supply... so "Just speculation" doesn't really make sense as a criticism--- ALL investment is speculation, all investment in early stage technologies is higher risk, and more "speculative".
Bitcoins capacity is growing all the time, Segwit is a big jump, and MAST and other technologies will increase it further.
Not to mention, we're about a year away from Lightening Networks being deployed into production, and he theoretical capacity of that is infinite, since it happens off chain. (LN will eventually be multiparty-- so you could get paid in your channel and then pay from your channel to various other receivers, though that capability may be more than a year off.)
Further, segwit enables side chains so you can have bitcoin as a hub and any number of side chains with special purposes (including possibly very high transaction velocity) adding... with even less on chain load than lightening network, depending on how they are used.
The tech is advancing rapidly, though it's highly involved and obscure to even most developers, so they propagandists are great at spreading FUD in favor of their particular choices.
All of the above applies to Ethereum as well, to varying degrees of implementation.
Altocins have an incentive to hype what they are going to do. bitcoin is conservative and doesn't hype (no ICO) so people miss how much is actually happening.
Bitcoin is dominant in large part because it has the best development team and they are delivering code at a huge rate-- even compared to ethereum.
Bitcoin script allows you to specify more complex conditions for settlement than a digital signature by a single key.
For example let’s say we first lock coins into a condition that both your key and mine are required to spend. Then I “send” you money by signing my half of a transaction sending the payment to you and returning the change to me. If I later want to pay you again, I send you a new partially signed transaction with the sum of all the payments so far. Either one of us can broadcast the most recent to when we need the funds for other purposes. Since one tx is needed to set this up, and one tx is needed to close out/settle then this makes sense as long as there is payment, or even for single payments if the close out is used to setup a new payment channel at the same time (my change address sets up a similar 2-of-2 with someone else).
This protocol as written is not safe, but only because it’d be too tedious to write out a full protocol in a HN comment. With tools that are available besides signing, such as relative lock times and malleability-free transactions it is possible to construct safe versions that don’t fall down in the face of DoS or rebroadcast of old state etc.
If everyone uses such transactions, which they will eventually once the tools are more mature, then you only need proper block chain access for the rebalancing transactions.
Off chain transactions are not censorable because they are between offline parties in direct communication with each other. And settlement aka rebalancing transactions are not distinguishable from regular payments if MAST is available and cooperative closure is achieved.
Lightening network and side chains, are two of the technologies that do this, and neither compromise decentralization or censorship resistance or security. In fact, they enhance those qualities.
To be clear, sidechain transactions are just transactions on another chain. I wouldn’t call that off chain as it actually introduces more transactions (to move across the peg).
It's less transactions. Imagine you're paying your cable bill.. you can move some value to the side chain (one transaction) then make 12 monthly transactions-- on the side chain, so off the main chain--and then after cancelling move the balance back to the main chain (second transaction)
The amount of on chain transactions supported by a global mining network is fixed. You can’t just keep adding side chains or else you will run into the same scaling limits.
The not so generally accepted answer for Bitcoin's low TPS is to use something called the lighting network.
It's a way to lock up funds so you can tx with low fees and quick confirmations because you aren't hitting the main chain until you want to withdraw your funds.
It's performing a wire transfer to venmo, once you do it you don't have to pay to move it around in venmo, except with the lighting network there is no counter party risk. If venmo gets hacked you don't lose your funds, they can't try and steal them, they can't prevent you from withdrawing.
Bitcoin faces serious barriers in scaling to high volumes. As you say, transactions are limited to ~10/s. A side effect of this is that transaction fees are now $2 per transaction (and rising). Furthermore, the blockchain has now exceeded 100 GB in size. At high volumes, this will approach the petabyte scale. Only data centers will be able to store the blockchain, and power will be concentrated in the few players able to build/rent blockchain data centers.
However, these barriers do not mean Bitcoin is doomed to fail. Logically, there are two paths to success: (1) Bitcoin is rearchitected to handle high volumes or (2) Bitcoin succeeds in low-volume applications.
Bitcoin has massive long term issues of value storage vs. 50.01% attacks.
With capped coins, transaction fees must be large enough to prevent major miners from defecting. So, they need to support large number of transactions to have a stable value store.
Bitcoin now serves the same purpose as digital gold. Some other crypto currency will probably end up as the equivalent of "digital cash", one which is suited for the purpose, people will be able to shift back and forth between the two in the same way they can now with gold and cash.
MAST is in discussion now and will dramatically reduce transaction sizes (SEgwit already did it too, and segwit is still being deployed).... with MAST bitcoin will be more of a smart contract system, and even very complex transactions will be tiny.
Transaction fees were $0 last week. A bit higher now due to the ATH and high numbers of transactions... most of the "high bitcoin fees" claims are from spammers who were spamming transactions to drive up fees. Chinese miners are able to do this profitably, unfortunately, and this is an issue that is going to need addressing.
Segwit makes it a lot harder, and as segwit adoption happens it will be a lot cheaper to transact, even when the spammers are spamming.
So BTC is more like gold then, but with "fiat" value. It's an amazing experiment from computational/cryptographic point of view for sure. The greedy madness around it will cause a lot of troubles though; I've heard people taking 2nd mortgages and going heavily in debt to buy BTCs...
Gold is hard to transact with due to physics, but ideally a digital currency should be capable of micro-transactions.
Here is a quote from the bitcoin.pdf white paper: The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions...
If your vision of the future of Bitcoin is simply "a store of value" then I think you are missing out. There is a lot more value to disrupt by making transactions more efficient, and I hope the Bitcoin of the future will evolve to tackle this problem.
I believe that more 'transactions' will happen off-chain rather than on. I expect to see a rise in merchants and gateways - similar to what PayPal does.
Bitcoin is the access point to just about every other cryptocurrency. So if you want to buy most cryptocurrencies the path of least resistance (for most people) is to buy bitcoin and then buy something else.
That of course doesn't say why someone would want to buy any cruptocurrency, but if you primary concern is the low TPS on Bitcoin and Ethereum then there's plenty of other options.
There are other currencies out there that have been designed to do that, such as Ripple (it can sustain 1000TPS, I think). Its also 3rd in volume behind BTC and ETH, and its being deployed to banks.
Ripple isn't a cryptocurrency and it's not distributed, it's not really comparable, as its centralized. When you're centralized its trivial to deliver high transaction rates but you lose all of bitcoins advantages.
good question, my bet is Bitcoin Cash will be the cryptocurrency that will scale to the masses, it has a larger block size for transactions and large mining rigs support
