Monday, October 30, 2017

"If it's not a currency, it is nothing else"

That's Mark Edge (quote from memory, but I think I got it right) talking about the Bitcoin/Segwit/2x controversy on last night's Free Talk Live. Mark and Ian Freeman did their weekend broadcasts from the Texas Bitcoin Conference.

Mark's statement refers back to Saturday night's show, on which John Sacco defended the current track of Bitcoin, asserting that Bitcoin will never be able to scale up to handle the volume of e.g. Visa and that we might as well just accept that it's going to become and remain a low-transaction-volume, high-transaction-fee "settlement layer" and store of value.

Of course, Mark is saying exactly what I've been saying for some time as well. If Bitcoin is not an increasingly going concern as a cryptocurrency that normal people can buy normal things at normal places with, where's the real value in a large network of expensive graphics processors tossing around bits as "proof of work?"

Let's talk about scaling.

When I was in high school, I worked at a gas station. My guess is that 95% of customers paid cash for their gas.

When one of the 5% pulled out a credit card, I in turn pulled out a bulky analog machine, stuck the credit card on it, filled out two slips of paper (one original, the other one a copy made with a piece of carbon paper between the two slips) with the transaction details by hand with a pen, put the paper on top of the card, slid the machine (KA-CHUNK) to make an impression of the physical card, then went in the back room where I punched the transaction information into a little terminal that took over the phone line (MODEM NOISE) for about two minutes and then let me know whether or not the card was any good.

32 years later, most people use credit or debit cards for most transactions in most stores. There's little or no interaction required by store personnel. See the total, slide the card, hit OK (enter PIN if it's a debit transaction), wait a few seconds, done.

I wonder how many transactions per day Visa handles now versus in 1985?

Better computers, better networks, cheaper bandwidth, cheaper storage ... the wheels may come off Moore's Law at some point, but there doesn't seem to be any particular reason why the Bitcoin network can't scale up well into the future instead of pulling over to the side of the road like it has an empty gas tank and four flat tires as soon as it starts getting popular and its network starts getting congested. Increase the block size and keep on truckin'.

Which, of course, is what Bitcoin Cash is doing, just as envisioned in Satoshi Nakamoto's inaugural white paper. And that's why Bitcoin Cash is "real" Bitcoin and the impostor still calling itself "Bitcoin" and forking off into Segwit, 2x, Bitcoin Gold, Bitcoin Silver, Bitcoin WTF is well on its way to becoming a has-been altcoin.

I do wish that my cloud mining service of choice, (yes, that's a referral link -- buy some hashrate -- you can get in for single-digit USD, and use code Halloween holiday code HF17HLWN10ALL for 10% off!), would hurry up and start offering Bitcoin Cash mining. It hasn't yet, so for the nonce I'm mining Ethereum and Dash.

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