What a crazy time, from $5,000 to $11,000 in less than 48 days. Insane! But is Bitcoin really worth that much money? Do people really know where they buy in to? Do people know the problems bitcoin is facing?
Well in mine opinion, NO! My biggest concern for Bitcoin is that the ecosystem is doomed.
There are three parties who have leverage on Bitcoin: the exchanges (users), the miners, and the core developer. The problem is that every party has his own stake in it, the miners and exchanges want to make profit, and the core developers want a good product (protocol). Well, here is the problem, they don’t have any kind of consensus with each other what so ever.
Bitcoin faces major problems in its ecosystem. One bitcoin transaction equals a whole week of energy for an average American household. That is just insane! Well if you are in the blockchain world for a little while you may think, why don’t we go to proof of stake instead of the current proof of work protocol. Well, the miners are never going to accept that. They invested billions of dollars in hardware to mine Bitcoin. And because the miner are the ones who run the protocol, they can decide which protocol to run. The developers and miners end up in a stalemate…
So what this means is that bitcoin always will run on proof of work, or… is there a way out, like Ethereum is using (Casper protocol)? Naah unfortunately the miners wouldn’t stop running the old bitcoin software and people will still use the old Bitcoin. Also, the “bitcoin wealth” is very unfair distributed. Better said, 4% of the addresses hold around 94% of the total bitcoin supply, if you would put a Proof of Stake protocol in that ecosystem, the consequences would be very scary.
4. block size increase
Block size increase would be another solution, at least if we have to believe some experts. Also with this solution there is no consensus if and how this is going to solve the problems. If the block size will increase, there will be less smaller miners and more bigger miners and the centralisation would increase dramatically, that is NOT were bitcoin is made for. The original thought was decentralisation not centralisation and even when you increase the block size, you wouldn’t solve the energy consumption problem.
As everyone can see, there is no consensus in-between the people who have leverage on bitcoin.
Eulogy made by Seppe