Whenever new research surfaces regarding Bitcoin and other cryptocurrencies, interesting things are bound to happen. The latest publication of such research on Hacking Distributed points out some interesting aspects of Bitcoin and Ethereum. None of it is actually surprising, but it does show that some things will need to change very soon. That’s especially true in regards to Bitcoin, as it is clearly underutilizing the potential of its technology right now.
Addressing Bitcoin’s Flaws is not Easy
The research posted on Hacking Distributed points out some very interesting things about both Bitcoin and Ethereum. Although people familiar with these projects know all too well that things have not necessarily evolved in the right direction, it’s always good to see independent researchers come to similar conclusions. More specifically, the state of both Bitcoin’s and Ethereum’s networks is anything but optimal right now. Changing that situation will not be easy either, as there are quite a few things that will need to be addressed.
First of all, the research shows how Bitcoin is not utilizing its network to its full potential. More specifically, there is nothing preventing the Bitcoin network from using on-chain scaling solutions such as an increased block size. Contrary to what some people expect, such a block size increase will not necessarily increase CPU and disk space requirements in a major way. That’s because the hardware needed to process such transactions has become a lot cheaper in price. There is no “quantitative argument” in regards to Bitcoin’s maximum block size.
In a way, that alone validates what Bitcoin Cash is doing. Rather than use a solution such as SegWit, the developers simply increased the maximum block size to 8MB. Many Bitcoin Core supporters assumed this was the wrong course of action, but it turns out there is no sound argument against such a decision. In fact, there is no reason not to increase the Bitcoin network block size in the future, even though most developers have decided not to pursue this option right now. Whether or not they have made the right call will always remain subject to debate.
Additionally, the research shows neither Bitcoin or Ethereum is as decentralized as people would like to think. Mining operations for both currencies mainly originate from one country, which is no big surprise. Everyone wants access to cheap electricity, but very few countries will ever provide it. It is evident that decentralization in cryptocurrency is a lot harder to come by than most people would like to think.
Over the past few years, researchers have pointed out how Bitcoin mining is extremely wasteful. Electricity can be used for many different purposes, and it seems this waste is not unique to Bitcoin. Ethereum is not in a better place in this regard, although it seems its waste comes in a different form. More specifically, the network suffers from a higher rate of uncle blocks compared to Bitcoin. That is by design, but it may very well become a problem over time. Less mining power is used to secure transactions, which is something the developers will need to look into at some point.
In the end, studies like these will always bring information to light that most people are more than willing to ignore. The majority of people involved in crypto right now only care about the price of their coins rather than the technical aspect of things. Words like decentralization, distribution, and fairness have far less meaning to them right now. All of the problems outlined in the research will have a negative impact on both Bitcoin and Ethereum if left unchecked.