International Business Times notes that Bitcoin transactions are becoming excessively slow. The result is that some businesses that had accepted Bitcoin are now refusing to accept it. Others are warning Bitcoin that continued issues could result in more of them terminating the relationship. IBT describes the problem this way:
The problem relates to how transactions are processed on the blockchain, the decentralized, distributed ledger technology that underpins bitcoin.
The average time it takes for a bitcoin transaction to be verified is now 43 minutes, and some transactions remain unverified forever. Some of the problem stems from the fact that anyone can add a fee to every bitcoin transaction, which bumps that transaction up in the queue, meaning that those who didn’t pay such a fee — or didn’t pay a sufficiently big fee — may be waiting hours and sometimes even days for a transaction to complete.
Contrast that with, for instance, Visa. They say they handle an average of 2,000 transactions per second and have the capability of 56,000 transactions per second. The contrast in speed is pretty evident. There were 40,000 Bitcoin transactions waiting to be processed at one point this week. That’s now dropped below 10,000, but so has the dollar value of Bitcoin.
There are two separate groups in the Bitcoin community, Bitcoin Core and Bitcoin Classic. Each has a different way it believes the blockchain needs to be changed to increase adoption on the Bitcoin money system. IBT reports that:
Some in the Core group have this week suggested the slowdown in transactions observed over the last seven days has been caused by members of the Classic group spamming the network with low-fee transactions that miners simply don’t want to accept, and therefore clogging up the network.
Bitcoin’s architecture worked well when it was not widely used, but with over 200,000 bitcoin transactions processed every day and a market capitalization of over $6.4 billion, the system is beginning to creak.
The MIT Technology Review quotes Gavin Andresen as saying, “The way things are going, the digital currency Bitcoin will start to malfunction early next year. Transactions will become increasingly delayed, and the system of money now worth $3.3 billion will begin to die as its flakiness drives people away.” There are other doomsayers, including researchers at Cornell University.
Mike Hearn has blogged that the fault lies with the Bitcoin community. Gavin Andresen says this on his blog, “In my view, people are using the block size limit for something it was never meant to do– to influence how people use the Bitcoin blockchain, forcing some uses off the blockchain.” He also points out that the block size actually has a benefit of being a protection against attacks. But it’s obvious something needs to be done if that benefit is to continue having value.
Are you a Bitcoin user? Have you experienced delays in having your Bitcoin transactions verified? Let us know in the comments below, or on Google+, Twitter, or Facebook.
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