It’s hard to believe that Bitcoin first reared its head seven years ago. Big things are now happening for the popular digital currency as it continues to grow and become more accepted by the mainstream. Some speculated that unless serious overhauls were made to the system, the constant growth could end present big problems. Now, as more users and financial institutions are adopting the popular technology, it seems like the worst has come to pass for Bitcoin.
The issues stem from a design flaw with the overall Bitcoin system. According to the MIT Technology Review, the decentralized computer network can only process seven transactions per second, and at the beginning of March, this system finally reached its capacity limit. The result is that many pending transactions are currently stranded with no way to complete themselves. This has reportedly affected upwards of 20,000 transactions. Many users of the digital currency have been forced to wait hours, and sometimes even days, to receive a transaction that typically would have taken minutes.
To understand how and why this is happening requires us to explain a little bit about how transactions work. As most Bitcoin users know, transactions are sent through a database called a “block chain” and these blocks are created and serviced by “miners.” The transactions are confirmed when a miner makes a new block on the network chain. Typically, this process takes several minutes and holds 1 MB of info. The problem is that the service has become so popular that the amount of transactions attempting to be processed is larger than that size. The Verge reports that in an attempt to fix the problem, users are calling for the memory size to be increased, which would allow for more transactions to go through. There are presently two modes of thought on this solution, with one camp supporting an expansion of the original Bitcoin codebase known as “core,” and those in favor of a new
system called “classic.”
Don’t worry, none of this means that your Bitcoins are going anywhere if you already have funds invested in them. This just means that certain transactions are taking longer than usual, not that your money has been deleted. Those curious as to how these changes might be affecting the digital currency market can find some deeper insights at FXCM, which offers a detailed breakdown of the highs and lows of Bitcoin as well as a general overview of the digital currency for the layman. These current hiccups can be attributed to growing pains more than anything else, and they’re a testament to the popularity of digital money.
We’ve rounded the corner of people dismissing the concept of a crytpocurrency with more and more banks now adopting an “if you can’t beat ’em, join ’em” mentality as they begin their own explorations into the digital currency marketplace. In fact, Forbes reports that 40 separate banks are exploring block chain technology to invest and trade specific products. While still in its nascent stages, this could have far-reaching effects on the future of digital currency. This remains an early experiment, but it shows how far the concept of digital monetary transfers has come and reinforces the idea that they’re only going to grow in the future.