Unreasonable Bitcoin Expectations

Bitcoin Unlimited backers say that without a quick switch to bigger blocks Bitcoin is doomed and will lose out to competition from altcoins.

In their view, on-chain transactions must stay very cheap, as they have been five years ago.

And Roger Ver, one of the leading Bitcoin Unlimited backers, expected Bitcoin to assure World Peace, which was his motivation in joining in the first place. He said so in a recent video interview found here.

Of course it would be nice to have the Bitcoin network make war impossible. And while we’re at it, cure cancer, eliminate poverty, and solve global warming as well.

But that may be asking for a bit too much. Bitcoin adds the ability to send payments to the Internet protocol. That’s major progress. It has value even if it doesn’t lead to the revolutionary goal of eliminating war.

So even if Bitcoin doesn’t stop war, for the very least we should expect it to beat the VISA transaction rate (100 billion a year). All of those transactions must be on the blockchain. And all of those must be for free.

I am not an expert on the technology behind Bitcoin. But I know that Bitcoin is not designed to be efficient, but to be secure and to require no trust in third parties.

That makes it impossible to build such a system. If the engineers actually building and maintaining the code that has worked for eight years could just wave a magical wand and get free on-chain transactions of unlimited size and numbers, they would do so. But they can’t. The numbers just don’t add up.

The value of the Bitcoin network comes from its properties as secure and not needing trust in third parties. It’s impossible to scale this to 100 billion transactions a year.

It would be nice to have buildings going up 100 stories at no cost and make real estate in Tokyo affordable for everyone. It would be nice to have rocket costs go down by a factor of 1000 to make colonizing Mars easier.

But not everything that would be nice having can actually be done easily right now. And Bitcoin should not be evaluated with a standard of unreasonable expectations.

Compared to the VISA network, Bitcoin is doing well after eight years. VISA after eight years (1966) was just starting to license to banks outside of California, and VISA lost millions of dollars to credit card fraud at the time.

If you set your expectations comparing to VISA, compare to VISA in 1966.