Bitcoin is on the verge of a constitutional crisis

Seen this?

Bitcoin is on the verge of a constitutional crisis By Timothy B. Lee

Aug 18 2015

http://www.vox.com/2015/8/18/9168977/bitcoin-constitutional-crisis

The Bitcoin community is facing one of the most momentous decisions in its=six-year history. The Bitcoin network is running out of spare capacity, and=two increasingly divided camps disagree about what, if anything, to do abou= the problem.

If these two sides fail to reach a consensus, the Bitcoin network could =80 according to one side, at least — slowly grind to a halt as t=e number of transactions exceeds the network's capacity to process them. Ev=n worse, if a fix for this problem is forced through prematurely, it could s=lit the Bitcoin network in two and permanently damage public trust in the n=twork.

The argument is the closest thing the Bitcoin community has had to a const=tutional crisis. Bitcoiners are trying to figure out who, if anyone, has th= authority to make technical changes to the Bitcoin network's foundations. 5= far, neither side in the increasingly heated debate has shown much willing=ess to compromise.

The Bitcoin network is running out of capacity

The Bitcoin network processes transactions in units called "blocks," which=are created about every 10 minutes. To prevent malicious parties from clogg=ng up the system with spam, the original Bitcoin software limited the size o= each block to one megabyte, which corresponds to a few thousand transactio=s. When Bitcoin was created in 2009, that left plenty of room for growth.

But Bitcoin usage has been growing, bringing the network closer and closer=to its maximum capacity. Right now, the network is only 30 to 40 percent fu=l on average, but it sometimes gets congested during periods of high demand= causing delays for users. And if current growth continues, things could ge= a lot worse in the next year or two, as the network gets closer to 100 per=ent capacity.

And if Bitcoin is going to become a mainstream payment platform, it's goin= to have to grow a lot more. Bitcoin handles tens of thousands of transacti=ns per day. Visa handles tens of millions. To compete with Visa and other m=instream payment technologies, the network is going to need more capacity.

Changing the limit is easy — if everyone agrees

The limit is just a number in the Bitcoin software. If that number were ch=nged to a higher value, the Bitcoin network would have more capacity.

The difficulty is that this only works if everyone agrees to raise the lim=t. The Bitcoin network is built on consensus. If some parts of the Bitcoin n=twork raise the limit and others don't, the network would be split in two. H=ving two

competing versions of the Bitcoin network running simultaneously w=uld be catastrophic. It would destroy trust in the Bitcoin network, since u=ers could never be sure which transactions were official. And it would like=y cause the value of bitcoins — the unit of currency — to p=unge, as people questioned whether the network had a future at all.