There has been a lot of uncertainty over Bitcoin’s upcoming fork and its addition of the SEGWIT protocol. Many people are confused as to why its even necessary and others have read between the lines and don’t like where the ‘evolution’ of Bitcoin is taking it.
Based on a few articles I’ve read on Steemit and the information I’ve been able to gather from mainstream news articles about the upcoming Bitcoin change to Segwit and the future of Bitcoin in general, I’ve decided to explore this topic further.
Having read a recent article by @Donkeypong entitled ‘People Ask Me What’s Happening with Bitcoin. Here’s Why I’m Dreaming Bigger.’ I was reminded that with this upcoming Segwit change there is more than meets the eye.
After @donkeypong conducted his research around Segwit he came to a startling conclusion. Bitcoin has reached a point in its evolution where it is and will no longer be the brightest star shining in the sky. Other points were made as well for example that it is blockchain that represents the future not necessarily Bitcoin. He goes on to state:
I have been inspired to think bigger than Bitcoin. The bottom line is that Bitcoin is stuck in 2013 and the recent updates do nothing to improve its long term outlook. With all due respect to Satoshi and the great innovation that he created, it was a first generation prototype technology. Bitcoin was never designed for large-scale use.
I have to agree with him on this last point
I have been following Bitcoin since its inception and never believed it could gain as much widespread adoption as it has done today. If you told me that Bitcoin would reach a price point of USD $3000 I would have laughed you out of the room. Bitcoin has changed the world and let the money men know what the people essentially want.
They want:
Transparency and Decentralization
According to another article published on Bitcoin Core entitled ‘The Segregated Witness Benefits,’ Segwit upgrades Bitcoin to a new and improved level and has the following benefits:
1.) Malleability Fixes (Security issues that need to be resolved and possibility to speed up Bitcoin using a new technology called ‘The Lightning Network’)
2.) Increased security for multisig via pay-to-script-hash (P2SH)
3.) Block capacity/size increase
From what I’ve read, none of it alone will allow Bitcoin to compete with newer blockchain technologies like Bitshares, Ethereum and Steem (which operates on a similar blockchain technology to BTS)
Another author who is very skilled when it comes to the technical analysis of cryptocurrencies, @modprobe recently wrote an article as well which looked at the flaws of the Segwit modification.
According to @modprobe and assuming his mathematical calculations, there is simply no way even considering Segwit changes that Bitcoin will be able to scale enough to meet widespread adoption unless it proposes an even newer more radical plan for development changes and announces another potentially damaging fork.
The seven transaction limit is really due to Bitcoin's 1MB block size limit. If we get a new block (on average) every 10 minutes, that means there's 1MB = 1024*1024 = 1048576 bytes of space for transactions, which is room for around 4200 small transactions (maybe 250 bytes each), which, divided by 10 minutes = 600 seconds, gives 4200/600 = 7 transactions per second. Obviously, if Bitcoin is to scale to be a mainstream, worldwide cryptocurrency, 7 TPS is simply not enough.
When you are looking at mass adoption you have to think about speed because if people truly need to use Bitcoin as a form of payment around the world and it is to be used as primary method of payment the network needs to be lightspeed to accommodate all the transactions.
Have a look at the following chart:
According to this chart Ethereum, Bitcoin’s largest competitor is already capable of processing over 2000 transactions per second and Bitshares / Steem blow that number out of the water with a potential to process over 100,000 transactions per second. Now that is speed!
Lets talk about Steem for a moment…
Steem is the cryptocurrency that powers the social networking site Steemit. Not only is there a strong use case but the blockchain technology backing Steem is identical to BTS in the sense that it’s possible to process over 100,000TPS which is many magnitudes higher than Bitcoin even after its Segwit (speed upgrade) modification.
Steem has multiple use cases…
1.) Steem can be used as a form of payment (similar to Bitcoin)
2.) Steem can be used to ‘power up’ and create a stronger social networking presence on Steemit.
Beyond those two use cases Steemit has been experiencing huge growth
According to an article published by @someguy123 ‘How quickly is Steemit growing? [STATS]’
Steemit is getting close to reaching a growth rate of over 20,000 new accounts per month. As the demand for accounts increases the demand for its lifeblood, the cryptocurrency that powers it. The demand for Steem increases.
In addition to accounts, the number of posts on Steemit has been increasing dramatically creating an even stronger network effect for the whole platform which will cause Steemit to experience increased exponential growth in new user base.
If you’ve been paying attention, you may have already got the message.
Techblogger Wrap Up
From my research into Segwit, Ethereum, Bitshares and Steem it seems clear that Bitcoin has reached a peak of growth in terms of its long term potential for the time being as opposed to Steemit which is just at the beginning of it’s exponential growth cycle.
If you have your heart set on a newer more advanced Bitcoin then you may want to read about a proposal for a new Bitcoin called BTC-U (Bitcoin United) written by @stan entitled 'Please don't change Bitcoin, you'll break it!'
https://steemit.com/hero/@stan/please-don-t-change-bitcoin-you-ll-break-it
Furthermore if you want to stay ahead of the game in cryptocurrencies, it may be wise to consider the idea of exchanging some of your bitcoin for additional Steem to capitalize on its higher technological advantages and it’s growing business model.
As always don’t invest what you can’t afford to lose as cryptocurrency markets in general can experience a lot of volatility.
Please leave your thoughts and comments below.
Thanks for reading!
Sources:
‘The Segregated Witness Benefits’ – Bitcoin Core
I Looked Into SegWit, and Here's What I Saw - @modprobe
People Ask Me What’s Happening with Bitcoin. Here’s Why I’m Dreaming Bigger. - @donkeypong
How quickly is Steemit growing? [STATS] - @someguy123
Image Sources:
BTC MANAGER