The community surrounding Bitcoin is at a crossroads on how to continue the growth of the virtual currency. At the center of it all is the blockchain — a decentralized ledger and database that keeps track of all transactions made using the cryptocurrency, according to the Wall Street Journal.
The problem lies in a technical barrier that limits how many transactions the blockchain can process per second. As a side effect it also limits how much the currency can grow. In some cases, It’s a limitation that was highlighted by prominent Bitcoin developer Mike Hearn via a Thursday post on Medium.
“The fundamentals are broken and whatever happens to the price in the short term, the long term trend should probably be downwards,” Hearn wrote in his post. “I will no longer be taking part in Bitcoin development and have sold all my coins.”
The day after his post, Bitcoin saw its value plummet to $358.77, a 16.5 percent drop from the virtual currency’s previous close of $429.73, according to Coindesk.
It’s not that it can’t be fixed, as Bitcoin is an open-source software. And several CEOs of Bitcoin payment services proposed a fix in August 2015 involving raising the blockchain’s blocks — the batches of bitcoin transactions — to 8 megabytes up from the 1 MB blocks it originally launched with. Bitcoin users would have to switch over to a new software client that supports the larger block sizes.
But opponents to a change stand to lose a lot if a switch occurred. According to Hearn’s post, two Chinese bitcoin miners — a term used for those that process Bitcoin transactions — have enough computing power under their belt to account for 50 percent of the Bitcoin’s processing power. The reason for this is whenever a computer in the Bitcoin network generates a new block to add to the blockchain, they’re awarded 25 bitcoins, or just under $10,000 at the Sunday bitcoin price of $385.70.
While there hasn’t been a consensus on what to do with Bitcoin, other alternatives are also being looked at. One possible alternative is a project called Bitcoin Classic, which would raise the blocksize limit for Bitcoin to 2 MB and provide room for expansion in the future.