$Why Bitcoin didn't become the next-gen currency
Tue, Jan 20, 2015Bitcoin is a wonderful project, it make money decentralized, created a currency that no one can control. But why didn’t it become the next generation currency?
##Mining Progress
Traditionally, the production process of currency should be hard and the difficulty should be same for everyone. For example, gold was once a currency that used globally, and recognized universally. The term mining origin from this.
Mining process of Bitcoin is a similar process. Each miner in Bitcoin trying to solve a math problem, compute the hash to be exact. If one of the peers find a solution, it announce it, receiving some Bitcoin, and ensuring the order of transaction by the same time. The mechanism of Bitcoin ensured that for every 10 minute a miner become the lucky one and the Bitcoin such a miner received is decreased with time.
##Problem in the Mining Progress
####Half of Bitcoin owned by 927 people by design
The Bitcoin wasn’t well know when it was invented. For more than a year, the creator of Bitcoin received most of Bitcoin mining in that period. And now half of Bitcoin that ever been mined is owned by less than 927 people.
This naturally make Bitcoin less decentralized. Although the infrastructure of Bitcoin is decentralized, but its ownership is not. No one own Bitcoin network, but there is a group of individual own half of its value.
Fortune is not evenly divided in Bitcoin network, nor it needs to. The early adopter of Bitcoin is purposeful own much more Bitcoin than others. Within two year after its announce, more than half of the Bitcoin was being mined. The traditional currency have either natural resistance or artificial control in this field. Although Bitcoin’s way of mining if free of control from human, the way it mining make it the cost of mining too high for a new comer to mine.
Pooled Mining
Mining is a painful process for everyone. After few years of Bitcoin’s release, the mining became increasingly difficult. This made a some of Bitcoin’s lover made a new kind of mining called pooled mining.
The pooled mining stand for the a group of mining device joined together, so that the rewarding became more reliable. Since every ten minute only one miner will get the reward, with the miner increase, each individual miner’s reward become less reliable, and somehow relay on purely lucky. Pooled Mining made it possible for a group of miner to work together and share reward respectively.
However, this violated the original purpose of mining. The mining activity is not only a process to disturbing Bitcoin, but a process to ensure the order of transaction, which is a part of Bitcoin infrastructure required to protect the network free of anyone’s control. This assume that no miner can mining in a speed faster than the rest of network. However pooled mining enable a group of miner work together, making reverting history in Bitcoin possible.
##The long time to ensure a transaction
While a transaction by traditional banking system usually cost seconds, however a transaction in Bitcoin need at least 10 minute to be ensured(after 60 minutes a transaction will be considered irreversible).
For transaction in daily life,it is unacceptable to wait for waiting 10 minute in front of counter. For this reason Bitcoin is not widely used in daily life.
##Heavy network and storage are required to operate Bitcoin independently
To run Bitcoin independently, approximately 20 GB of disk and a few hundreds MB of traffic per day is required. This requirement is not difficult for a desktop computer but is difficult for a mobile device.
##Conclusion
Bitcoin is a fearless attempt for a decentralized currency, but there is still something to be improved before a crypocurrency can enter a normal people’s daily life.