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In a test of Bitcoin's ability to adapt to its own growing popularity, the Bitcoin community is facing a dilemma: how to change Bitcoin's core software so that the growing volume of transactions doesn't overwhelm the network. Some fear that the network, as it's currently designed, could become overwhelmed as early as next year.
The answer will help determine the form Bitcoin's network takes as it matures. But the loose-knit community of Bitcoin users is not in agreement over how it should proceed, and the nature of Bitcoin, a technology neither owned nor controlled by any one person or entity, could make the impending decision-making process challenging. At the very least it represents a cloud of uncertainty hanging over Bitcoin's long-term future.
The technical problem, which most agree is solvable, is that Bitcoin's network now has a fixed capacity for transactions. Before he or she disappeared, Bitcoin's mysterious creator, Satoshi Nakamoto, limited the size of a "block," or group of transactions, to one megabyte.
Under the one-megabyte-per-block limit, the network can process only about three transactions per second. If Bitcoin becomes a mainstream payment system, or even a platform for all kinds of other online business besides payments (see "Why Bitcoin Could Be Much More Than a Currency"), it's going to have to process a lot more. Visa, by comparison, says its network can process more than 24,000 transactions per second.
(Score: 2) by JNCF on Wednesday May 20 2015, @02:09PM
And I disagree wholeheartedly on your point that bitcoins are just cash, too. Bitcoins aren't cash any more than the balance in a PayPal account can be considered cash. It's not cash until someone turns it into cash for you.
Bitcoins are much more analogous to cash than they are to PayPal funds, in that both dollars and bitcoins are controlled by the owner and cannot be revoked by a third party. Bitcoins stored in an exchange might be more like PayPal funds, but if you store your private keys yourself then the cash metaphor is pretty valid.