It’s A Governance Issue
The “blockchain” is the heart of the Bitcoin system. It’s a fully transparent, publicly visible, ledger of every transaction ever performed over the network. Approximately every 10 minutes, a new block of verified BTC transactions is added to the blockchain by a “miner“.
The figure below shows a simplified view of the BTC blockchain. As you can see, the system’s current design parameters only support a throughput rate of less than 10 Transactions Per Second (TPS).
If the usage of Bitcoin as a secure, decentralized, private, payment system continues to grow, the low TPS rate will become a bottleneck if the system doesn’t scale to accommodate the increased load on the network.
Two obviously simple ways for increasing the Bitcoin system throughput are to:
- increase the maximum block size, S
- decrease the block addition period, T
A major bone of contention in the Bitcoin community is how to scale the TPS rate to accommodate the anticipated growth in usage due to more and more people “discovering” the benefits of this peer-to-peer cash system over traditional banking systems of dubious credibility. This “block size” debate has been raging on for 2 years now. There are a range of proposals in play for solving the scaling problem; some are dirt simple and some are mind-boggling complex.
Resolving the dispute is exacerbated by the fact that, by design, there is no central authority controlling the system’s evolution. It’s a governance issue not dissimilar from growing a “flat” startup company into a hierarchical, “mature” organization. If a centralized authority with control over the evolution of the Bitcoin protocol is established, the doors will burst wide open for political intrigue and clever, special interest group agendas to infiltrate the currently egalitarian system.