Bitcoin has features that can be seen as both strengths and weaknesses, especially in comparison to other cryptocurrencies that are present in the market.
Let’s try taking a closer look at the first crypto – what advantages does it have, what problems is it facing, what could it look like in the future?
First of all, it needs to be noted that Bitcoin has no original team behind it. What it has is an open source community, and, in a way, that’s what makes Bitcoin’s further development hard. The size of its community means that a lot of effort is required to reach consensus on implementing big changes in its blockchain network.
This can looks like a weakness if we compare Bitcoin to other blockchains – like Ethereum, for example. Ethereum has a native team and a community leader, which makes large-scale changes to its network relatively easier to pull off. But on the other hand, it can also be seen as a strength. Because Bitcoin offers high decentralisation in terms of altering the blockchain’s code, it means that for changes to take place, a proper worldwide consensus is required. This, in turn, acts as a guarantee that only the truly desired features will be added, and that the changes will happen in a secure way. This keeps the Bitcoin blockchain reliable and straightforward.
Then there is the matter of blockchain consensus and the debate of choosing between Proof-of-Stake and Proof-of-Work framework. Many modern blockchain projects choose PoS for the sake of transaction processing speed, but Bitcoin will likely continue to employ PoW. With Proof-of-Work format, high hash power means that the blockchain network has better protection against data loss and attacks – it has proven to be secure in the past. Proof-of-Stake, however, is still relatively new as a concept and potentially not quite as reliable.
And speaking of hash power – this factor rests heavily with the miners’ willingness to invest effort into finding new blocks. Miners’ revenue comes in Bitcoin, and now that its price is on a major rally, it represents a huge motivational factor for miners. And this, in its stead, increases the blockchain’s reliability compared to alternatives.
To sum up, we can say that Bitcoin is fundamentally slow – there have been attempts to solve this issue (like SegWit and Lightning Network), but ultimately they could not solve the issue of low network throughput. Because of the complexity of reaching consensus in the network in order to implement changes, it is likely that, in terms of scalability, Bitcoin in the future will remain mostly the way it is now.
This means that other blockchains are likely to surpass Bitcoin when it comes to speed and transaction algorithms. But that is fine, because that is not where Bitcoin’s true value lies. In my opinion, it is likely that, rather than the currency of choice for everyday payments, Bitcoin is going to play the role of a long-term method of storing value in the crypto world, going forward. As well as a reliable way of transferring large amounts of capital and paying for expensive goods and services.
Image source: CEX. Io Media
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