Bitcoin cash could have its block size increased next year, according to an early roadmap from Bitcoin ABC.
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The Centralization Issue of Scaling Bitcoin Solely by Block Size Increase
A block size increase from 1 MB to 2 MB or even to 8 MB will likely not lead to the occurence of severe technical issues that could negatively affect the bitcoin blockchain in the long-term.
But, as bitcoin and security expert Andreas Antonopoulos explained at the ‘Bitcoins in Bali’ meetup on June 27th 2017, if the block size gets increased in orders of magnitude at a rate that is proportional to the increase in the user base, a difficult problem will inevitably emerge, wherein bitcoin transitions from a decentralized to centralized system.
The current system of Bitcoin Cash is viable in solving the short-term scalability solutions of bitcoin. Transaction fees are low now, but as the network of Bitcoin Cash grows exponentially and the user base increases with it, there is a certain limit to which the supposed unlimited block size cannot handle.
“3 million today. Let’s say that in two years, we have 30 million people. To maintain exactly the same level of fees as we have today, we need a block that is 10 MB in order of magnitude bigger. Five years from that, bitcoin gets really successful and we need to get 300 million people to use it. Now we need 100 MB blocks,’ said Antonopoulos.
Eventually, as the trend follows, the block size increases to 1 GB, to a point in which independent node operators can no longer cope with updates and verify transactions. Antonopoulos added:
“If my block takes 11 minutes to validate, then i’m off the blockchain, which means fewer people can validate independently, which means the system becomes centralized. With which one of these increases, fewer people can participate in the validation process, fewer people can participate in storing the data, and fewer people can participate in being independent actors. We go from a system that is decentralized to a system that gradually gets more and more centralized,” said Antonopoulos.
Hence, some on-chain scaling could benefit the bitcoin industry and businesses within it in the short-term, as an increase from 1MB to 2MB is not sufficient to impact the decentralized ecosystem of bitcoin. But, as the block size increases become larger over time, bitcoin or any other cryptocurrency in that matter will suffer with a serious centralization issue, which fundamentally defeats the purpose of operating a decentralized blockchain network.
Bitcoin is globally acknowledged and adopted as a robust store of value and a safe haven asset. It is a settlement network that has on-chain scaling problems which can be solved through second-layer scaling.
There exists a clear limit to the amount of scaling block size increase and on-chain capacity increase can provide and in order to maintain the decentralized nature and censorship resistance of bitcoin, it is important to pursue innovative scaling solutions that provide alternative ways for businesses to provide lower fees and an efficient platform for users.
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How Blockchain Technology Can Help Increase Your Internet Privacy
Living in the age of the internet has come with a lot of advantages, but with those benefits also come certain dangers. Most, if not everyone, has used their personal information online. Whether that was to create a Facebook page or to make a shopping purchase, that information is still floating around on the internet.
A recent study conducted by Javelin Strategy and Research showed that billion was stolen from 15.4 million U.S. consumers in 2016, compared with .3 billion and 13.1 million victims a year earlier. In the past six years, identity thieves have stolen over 7 billion. Hackers love to take advantage of the vast amount of data that is relatively easily accessible online.
With the amount of money being stolen only increasing every year, it has now become critical to find some way to keep personal information private. Thankfully, there is a new technology that is becoming increasingly popular that may change both how we interact on the internet as well as how information is stored.
Blockchain for Safety
Blockchain technology, which is characterized by decentralization, is taking the internet by storm. Its popularity primarily stems from the growth and success of the online currency, Bitcoin. Each block of information has a history connected to it and no transaction can occur without being recorded in the system. It functions as a shared form of record keeping.
Because all the information is interconnected and the transactions are transparent, it becomes nearly impossible for hackers to break into the system and steal data, due to the fact that they are unable to add or remove from the blockchain without the activity being recorded.
The benefit of blockchain technology comes from the fact that it functions on a decentralized network. There is no centralized location where all the information is stored because the information is spread across the entire network. This distribution allows the encrypted information to be processed and stored privately, allowing access only to the parties who are involved.
Protecting Identity
One company is taking advantage of this technology and is seeking to increase the privacy of the user’s online identity. SelfKey is an identity management ecosystem that puts the customer in full control of their own data.
Through blockchain technology, the company is able to issue token “keys” to customers. These keys are encrypted through blockchain and it is up to the user to decide who they want to share their information with. Because users never overshare data, this leads to increased online privacy.
Users only share what is absolutely necessary to make the purchase or complete an application. Information is only stored on the user’s device and not in a cloud or database and is therefore inaccessible in the absence of user permission. Due to the transparency of blockchain technology, SelfKey can verify transactions and confirm the legitimacy of sources, while also protecting the individual.
The company promotes efficient and maximum privacy due to the decentralized nature of blockchain. SelfKey acts as a virtual wallet, with multiple applications, including managing bitcoin accounts, applying for a new bank account and investing in real estate, among others.
Ecosystem Functions
One way that startup companies are utilizing blockchain is through ICO’s, or “Initial Coin Offerings.” ICO’s are basically unregulated crowdfunding for millennials. Investors will buy into the company in exchange for cryptocurrency, such as bitcoin or other virtual funds, all of which employ blockchain technology.
By buying in, they will either own a part of the company, or will receive some sort of product related benefit. Probably the most popular ICO service is “Ethereum.” By using Ethereum, you are buying and selling blockchain tokens that companies produce: “Etherum wants to create an ecosystem where everything works together seamlessly as part of its vision for a ‘world computer’ – and that includes the tokens required to power it.”
SelfKey is currently in alpha testing, with their public ERC-20 token sale to be announced soon. In a time where your internet identity is constantly at risk, SelfKey is proving their worth as they seek to become the leading identity validation blockchain platform.
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South Korea’s Regulators Aim to Increase Bitcoin Trading Supervision
South Korea has quickly become one of the central countries associated with Bitcoin trading. Various South Korean exchanges are thriving as we speak. While this ecosystem is booming, the nation’s regulators are trying to assert control. More specifically, following a meeting with the International Monetary Fund, the South Korean government plans to increase its supervision of cryptocurrency transactions. This is all part of a major financial reform package affecting the country in the years to come. South Korean Regulators and Bitcoin No one can deny South Korea has become an integral part of all Bitcoin trading activity as of late. Bithumb, Coinone, and Korbit
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Ethereum Price Technical Analysis – ETH/USD Bearish Positions Increase
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Why Bitcoin Price Will Continue to Increase to $10,000 Despite Recent Correction
In late August, prior to the price correction of bitcoin caused by the People’s Bank of China, the country’s central bank’s ban on initial coin offerings (ICOs), many financial analysts including Max Keiser increased their interim price target from ,000 to ,000. At the time, the majority of users, traders and investors still remained skeptical … Continue reading Why Bitcoin Price Will Continue to Increase to ,000 Despite Recent Correction
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