Despite making a name of itself as the remuneration of choice for buying weed online, speculative pseudonymous currency Bitcoin is facing a dubious future.
Gavin Andresen was designated chief caretaker of the code powering Bitcoin in 2010. Though he stepped down from the job of “core maintainer” last year, he’s still deeply involved with Bitcoin, and now warns that the system does not have the processing capacity to survive more than another year or so before it’s paralyzed by the weight of transactions. As MIT Technology Review notes, Bitcoin can only process seven transactions per second while Visa can handle thousands.
Here’s Andresen’s predicting doom by early next year if the system isn’t fixed:
It is urgent. Looking at the transaction volume on the Bitcoin network, we need to address it within the next four or five months. As we get closer and closer to the limit, bad things start to happen. Networks close to capacity get congested and unreliable. If you want reliability, you’ll have to start paying higher and higher fees on transactions, and there will be a point where fees get high enough that people stop using Bitcoin.
To fix it, Andresen has released his own version of Bitcoin software called BitcoinXT, which he’s urging miners to use. The software allows for larger blocks of data for processing transactions. The limit in the current system is about 1 megabyte. Bitcoin XT’s 8 megabytes would allow as many as 24 transactions a second.
The new software has also caused a philosophical split among Bitcoin users, with some calling it an attempt by Andresen and partner Mike Hearn, formerly of Google, to seize control.
“I have followed this from the beginning & I agree that it is an attempted governance coup,” John Matonis, former executive director of the Bitcoin Foundation, told PC World.
Bitcoin XT will need about 75 percent of miners on their side to be seen as legitimate, but a 50-50 split between software choices could be just as ruinous.
Whichever choice emerges dominant, it’d be best for the Bitcoin community if it shakes out soon. The last year has seen the currency on a downward spiral and Quartz labeled it “the worst investment of 2014.”