The Three Major Path Being followed by Bitcoin
Dec 11, 2017 Posted / 1994 Views
During those days when Bitcoin was still unknown and very unpopular the demand for the currency was negligible in a way that one could send any amount of Bitcoin for free. There was no real network congestion on the Bitcoin blockchain only a handful of people and businesses knew of the cryptocurrency and its value compared to the US dollar was so small. A Lot of free money was swinging all around the internet worth of Bitcoins paid for losing bets. Bitcoin was not comprehended by even the people who program computer systems at the time. Many people couldn't imagine how all the parts of Bitcoin is running leave alone a view of what the future held for the cryptocurrency. A Lot of factors made it difficult to understand Bitcoin at that time. These factors briefly discussed below-made bitcoin less understood by the masses.
The pseudonymity and lack of central authority were attractive to scammers and hackers who became much involved with the cryptocurrency causing its widespread distrust.
The success of the system encouraged money minded individuals to infiltrate the system and clatter it with a bad image.
Bitcoin early adopters had been negative about its expansion to reach other people.
These three factors resulted in a significantly low awareness of this new phase of “free money”. The developers were aware of this vice that had befallen their latest creation and tried adding new features like minimum fees, minimum transaction amount and enhanced scripting.
Bitcoin has now moved past the free offer zone and switched to a new policy that is the satoshi subsidies zone. The unstable nature of Bitcoin block production coupled with a volatile market for the cryptocurrency soon brought issues with the blockchain network capacities.Many people were getting to know the cryptocurrency for the first time than it was the case during the satoshi free offer phase of Bitcoin.
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The existing Bitcoin market infrastructure was not well prepared for the fee economy phase of bitcoin and many people thought the cryptocurrency was better during the satoshi free offer phase. This time the bitcoin core developers were unwilling to support any further increase in the network size. This was because;
The previous increase in the network made the cryptocurrency become majorly centralized to a few big mining pools which was bad for any future consensus to be reached by the community. The developers feared it would become the first backward-incompatible change to be deployed since bitcoin introduction. Expanding the network did not present any serious engineering improvements on bitcoin and the community and service providers were not prepared to welcome the event. The consensus was not reached within the Bitcoin community and jumping into a large complex system at once would mean being faced with random large complex problems.
Several other methods were implemented by the developers to address congestion on the Bitcoin network. Among this changes included a significant optimization designed to network at its full running capacity. Strategies which allowed for improved block propagation were adopted. A new way of calculating bitcoin fees was developed and abilities to replace a transaction by just using higher fees were introduced.
Despite earlier fears of centralization associated with increasing block size, a gradual system which would double the network was put in place as software is being updated to use it. More trials and debates are taking place about increasing the transaction carrying capacity of each block.
The last era in the Bitcoin development is the period of self-sufficiency where the Bitcoin ecosystem will be expected to bear to cost of securing the network against double spending. This period will be gradually ushered in by cutting into halves the Bitcoin mining rewards done every four years. It is estimated that Bitcoin fees will become equal to the mining rewards by the year 2024 and will continue through 2028 onwards.
In this period much of the powers will be swayed back to the users and little powers will remain in the hands of miners and the core developers. This period will present the hardest times for large Bitcoin Businesses and miners as Bitcoin will be directly in the controls of users dictating transaction fees miners should earn. Miners will be squeezed and try to centralize their activities through resource pooling but user businesses can invest directly in Bitcoin mining offsetting the benefits of any such moves. Bitcoin founder — Satoshi Nakamoto, is quoted commenting about this period saying,
“Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.”
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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