Will full blocks really be bad news for Bitcoin?

The idea that full blocks, or a ‘fee event’ will be bad news for Bitcoin is based on a couple of assumptions. First, that Bitcoin is used as a currency, and second, that those using it as such will stop doing so.

This is just wrong. Bitcoin is young and evolving, with only a minority of transactions used for purchases.

Bitcoin is primarily a commodity and store of value at this stage of its existence. Full blocks have little impact on this role.

Leicester City Football Club are currently leading the English Premier League. They are reaching capacity every game with demand so high that £50 tickets are touted at £15,000 for a pair, a major ‘fee event’.

No journalist would frame this as bad news for Leicester City. It is an achievement, a direct consequence of their success.

Despite this, higher capacity would enable greater sales instead of ‘missed opportunities’. On 7th May, as the full time whistle blows, these opportunities have passed forever.

This is not the case for Bitcoin. As a commodity, rather than an event, Bitcoin will increase in value as demand increases. There is no deadline at which its value drops to zero.

For Bitcoin to go from less than 8,000 transactions per day to over 200,000 in 4 years is a success story. Full blocks are a newsworthy event, a celebration of what Bitcoin has achieved. “Product in such high demand that nobody wants it any more” read no headline, ever.

Any news stories on reaching capacity are good. The real story is a 4 year use increase of 2500% and major capacity increases on the way. The future is bright.

 
photo credit: 20,000 Miles via photopin (license)

John Hardy
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John Hardy

Software developer living in UK.
Longtime Bitcoin advocate.
Email [email protected]
Donations welcome: 1H2zNWjxkaVeeE3yX6uVqng5Qoi6gGvYTE
John Hardy
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Author: John Hardy

Software developer living in UK. Longtime Bitcoin advocate. Email [email protected] Donations welcome: 1H2zNWjxkaVeeE3yX6uVqng5Qoi6gGvYTE

  • TobiasBrox

    I think it’s wrong to compare Bitcoin with the Leicaster City Football Club. Yes, Bitcoin is the king of crypto currencies, but it’s a really insignificant player in the global transaction processing space.

    A better analogy would be a very small football club with some 20 seats by their playing field. People would not be willing to pay a lot for the tickets, if the stadium is full they would shrug their shoulders and go to another match instead. If the seats are all sold out, it would be really stupid not to set up some more seats.

    If bitcoin transactions become too expensive, people will either stick to traditional banking or chose a different crypto currency.

    Another thing, full blocks and the fee event is not some theoretical future event, it is something that has already happened. Was it a disaster? No. Was it bad? Yes. Is the capacity limit holding back Bitcoin? Yes.

    Increased fees will be a problem, it will prevent Bitcoin from being used for coffee-sized transactions. I believe that if another cryptocurrency will become the go-to-currency for coffee-sized transactions, it will eventually take over for bigger-sized-transactions as well.

    Increased fees is not the only problem – “stuck transactions” is the other side of it. Bitcoin is designed to work well when there is free space in the blocks. Users that didn’t get the memo that the blocks are full, or who are using the wrong software are suffering (a friend of me tried to send me bitcoins from a blockchain.info-wallet – 48 hours later he had to resend the transaction, it had timed out). One can no longer trust zero-confirmation transactions (some claim that they never could be trusted – but they do have a great business value and usability-value).

  • Chris Priest

    If your football club could double their stadium capacity by changing one line of code, they would do that instead of raising ticket prices.