0

I noticed that the recent blocks usually includes about 2k transactions with is almost the upper limit (max. 1 MB per block). From this I can see that bitcoin would never allow more than 2000 / 10 * 60 = 3.5 transactions per second which is far below other money services such as PayPal or any credit card company.

Because the 1 Mb limit is already reached in most blocks (in 2017), I can conclude the bitcoin ecosystem is already fully saturated in terms of transactions per minutes so it cannot expand further more.

Why should I trust bitcoins and invest my money on it with such considerations? Lots of people believe in bitcoins and put their money on it despite what I mentioned above.

I know bitcoin is a living ecosystem and the question of increasing the block size to 10 Mb has already emerged. Unfortunately performing any change to such fundamental build block of the system would have an enormous impact on its economy so may be never accepted by the community to make any change to the core code.

3

You are equating the value of a currency with the performance of just one way to exchange that currency. There are poor ways to exchange dollars as well.

Also, I'm not sure what you mean by "invest in such service". You can invest in bitcoin-related businesses and you can invest in bitcoin, the currency. But I don't see how you can invest in the bitcoin generation and transfer service provided by the blockchain.

  • 2
    An analogy: it's similar to claiming that the dollar is a terrible currency because you need to physically hand someone cash in order to pay! – Pieter Wuille Feb 8 '17 at 23:34
1

You're looking at bitcoin's main value as a medium of exchange. It's actually more useful as a store of value. Think more Gold than Paypal.

There are two reasons for you buy bitcoins:

  1. To purchase a good or service (usually because you can't purchase it using other means)
  2. To store value

If it's the first, you're not really "investing" in the coin at all, just using it as a convenient way to pay someone. If it's the second, you are investing, but you're not that concerned with exchanging it very often, hence not as concerned about how many transactions you can do.

The price of bitcoin comes almost entirely from the latter use case for the obvious reason that if you purchase a good or service with it, the person or business on the other end will most likely convert the bitcoins back to a fiat currency, making the transaction a net 0 proposition for the price of bitcoin. On the other hand, if you're storing value, you're increasing demand and reducing supply causing price to go up.

In other words, the reason to invest is for store of value, not medium of exchange.

-1

The number of transaction per sec. is not relevant as they are scaling solutions in the works (lightning, sidechains, etc.)

There are many reasons there is a 1MB limit, one of them is to allow miners to earn a return on their investment by creating a market for fees. This means if you want your transaction in the blockchain you gotta pay a fee.

Bitcoin can be scaled to many transactions per second through clever add-ons, it does not have to be done by increasing the block size per se.

Do you think that 10% of the population would invest $1000 each in bitcoin?
If you think that this scenario is possible, then the price can climb much higher (around $35K per bitcoin)

As per the question in your title about trust, the smat-a$$ answer is that bitcoin is trustless :)

  • The number of transactions per sec. is not relevant It's very relevant if you want to start a business that accepts Bitcoin. :) – Nick ODell Feb 8 '17 at 19:25
  • Not really. For example, you can accept bitcoins through Coinbase which provides instant off-blockchain transfers. There are other ways as well. – David Schwartz Feb 8 '17 at 19:30

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.