Bitcoin's Energy Concerns, Scalability and the End of Bitcoin Prediction

Bitcoin's Energy Concerns, Scalability and the End of Bitcoin Prediction

By xuanling11 | Crypto Learning | 29 Aug 2021


Satoshi Nakamoto developed an open-source P2P e-cash system called Bitcoin in 2009

His concerns about the Central bank debase the currency and creates waves of credit bubbles that damage not only our spending power but also the trust of the system.

His solution was a decentralized system without the need to trust a third-party money system that was purely based on cryptographic proof (verification).

The contribution he made was to invent a system of digital signatures to prevent double-spending and created a new economy so-called the Bitcoin economy in which miners contribute energy to process transactions. 

Before we dive into the topics, we do not need to know who Satoshi Nakamoto was. 

Satoshi Nakamoto was likely an individual or group of people who use pseudonymous names and actively engaged on the internet until 2014.

During his active years from 2009 to 2011, he gave some predictions on how Bitcoin might likely play out.

After 12 years, people are still using Bitcoin and many questions have re-emerged. 

 

Bitcoin mining energy concerns

In 2010, people were already concerned about Bitcoin mining.

Mining Bitcoin was making a choice to purchase Bitcoin with electricity or computational resources. 

Satoshi’s answer was referring to the Gold mining process that Gold mining is a waste but the waste is far less than the utility of having Gold available to use.

So utility is outweighed by generating energy waste.

He also furthered answered as resembled the computer heating that if you might need computer heat your home to further utilize energy without waste.

He hinted that energy might be used in a way that is efficient and there is always a source of energy to utilize that further mining Bitcoin.

He stopped the discussion in 2010 but the discussion continues. 

There may not be an ultimate solution to the mining energy waste dispute but when technology progresses, new clean technologies may replace the old ones.

The only issue is how to make new and clean energy cheaper for use and sustainable.

 

Bitcoin’s scalability

To be able to function as a regular currency, we need to scale up the Bitcoin network. Compared to PayPal transacting 34 million per day in 2019, Bitcoin needs to speed up.

Satoshi introduced Simplified Payment Verification or (SPV), a technique only to verify the header of the transaction or the key metrics to verify the transaction without transmitting all blockchain information from one side to the other.

Nowadays, Bitcoin's daily transactions are roughly 250K which is still less than PayPal did back in 2019.

Bitcoin layer 2 solution Lightning Network was introduced in 2015 and is likely to speed up the transaction speed to resolve scalability issues.

 

How is Bitcoin likely to die

Satoshi briefly touched on the topic of how likely the scenario of Bitcoin’s death would be. Because the central core design of Bitcoin relies on the Hash function, the case when Bitcoin does not work is when the Hash function does not work or the Hash function gets broken.

Satoshi said it is possible to break Hash in the future. However, software by the time may also progress to have a new hash, and possibly the entire Bitcoin network could save the new hash of all the old blocks so that no way the technology will break into the hash.

So he believed that technology would progress parallel to Bitcoin so that there will be a solution in the future to prevent Bitcoin death.

 

In conclusion

After Satoshi disappeared, Bitcoin did continue improving as he had expected. Technology did continue improving but Bitcoin is still running. His vision continues attracting more people to follow and admire.

 

Photo by Sigmund on Unsplash

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Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose cryptocurrencies are mentioned in this article. This information is only for educational

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xuanling11
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A delusional author who is possibly a nut job without any questions whatsoever about expertise in the subject matters to write with a freestyle.


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