Weekly Roundup: BTC Crosses $3,000, How To Deal With Stuck Transactions, Putin Meets Privately With Ethereum Founder
This week we briefly touch on bitcoin’s record-setting achievements, discuss why transaction fees are becoming so high, provide a few solutions on how to remedy fee problems, and talk about President Putin’s unexpected encounter with Ethereum creator Vitalik Buterin, and how blockchain technology is already being employed in Russian banking systems.
Bitcoin Heads for the Moon
With its humble beginnings as a fringe software experiment, to its adoption by a core group of “early adopters,” to the failure of MtGox and associations with financial fraud, bitcoin has finally gained mainstream traction, a positive reputation, and resultantly tripled in value this year. Though prices nearly touched $3,000 for the first time ever early last week, they soon settled between the $2,600 – $2,800 range, before heading back towards the $3,000s again.
Blocksize Limit Becoming a Problem
Transaction fees continue to soar as the bitcoin network is reaching its full capacity of 1 MB of transaction data per block. With over 220,000 transactions a day, confirmation times are frequently taking up to several hours, with some transactions falling out of the network “mempool” altogether after not being picked up by a miner for several days. To combat this, there are 3 potential solutions.
- If you haven’t done the transaction yet, be sure to set a big miner fee. A complicated multisignature transaction may cost up to $5.00 in fees to send (regardless of the amount being sent). Consult this dynamically-updated fee chart to compare miner fees to confirmation times. The quicker you want your transaction confirmed, the more bucks you’ll have to shell out.
- If you have already sent the transaction to the network and you’ve been waiting too long for it to be picked up by a miner, you can remedy this by broadcasting an additional transaction that will add a supplementary fee to the original transaction. This process is known as “fee bumping” and is a currently supported feature of many major client-side wallets, like Bitcoin Core, Electrum and GreenAddress.
- If your stuck transaction was sent via other means, or it wasn’t your transaction at all, there is still hope. A service launched this year called ViaBTC will push your stuck transaction through for free, provided you make your request before their daily quota of 200 transactions fills. How fast does it fill? Within the first minute of every hour. So, if you’re serious, that means you should enter the transaction ID you want pushed through into the website form and submit it exactly between :00 to :01 of any given hour, if you want to successfully take advantage of their free service. A pay service based in China offers to perform the same function, but with an advertised average transaction time of 18 minutes, for a nominal fee.
SegWit Offers Solution, Compromise in Blocksize Debate
What if there was a way to make the size of a bitcoin transaction smaller, therefore allowing more transactions to fit in each block, and thus speeding up confirmation times? SegWit, a contraction for “Segregated Witness,” is a slight tweak to the bitcoin Core code that proposes this exact solution. With a more stringent activation ratio than Bitcoin Unlimited, its support will be required by at least 95% of the network in order to be activated. Miners and nodes signal support for an alternative client (such as Bitcoin Unlimited, BitcoinXT and SegWit) by using their version of the software to conduct mining or node operations instead of the traditional Core client.
Support for SegWit seems to be coming from more directions than Bitcoin Unlimited, with core heavyweight Eric Lombrozo tweeting “I will happily support a block size increase HF as long as #SegWit activation is not held hostage to it…”
The move to 2 MB blocks isn’t being supported by everybody, however, as the bitcoin Core team continues to hold steadfast in their opposition to increasing block sizes. Their reasons are many, but chiefly is the concern that if the size of the bitcoin blockchain gets too unwieldy (it is currently over 120 GB in size), running a node will no longer be a possibility for most computer owners, leading to the possibility that bitcoin will become centralized and left in the hands of a powerful few.
The Core team believes that in order to maintain Satoshi Nakamoto’s vision of a financial platform accessible to anyone, a dramatic increase in the size of an already-huge blockchain might make it impossible for most people to run their own bitcoin node. This would lead to a centralization of bitcoin with extra powers given to those who are able to run their own nodes, and the system would perhaps lose some of the innate fairness that Nakamoto was hoping to achieve.
Putin Meets with Vitalik Buterin, Founder of Ethereum
Somewhat more of an off-beat and sparsely-covered story this week was Vladimir Putin’s meeting with Ethereum creator Vitalik Buterin. The two met on the sidelines of a Russian financial tech conference known as the St. Petersburg Economic Forum. It so happens that Russia’s central bank already uses software built atop the Ethereum blockchain to process payments and confirm customer data, so the idea of Ethereum and cryptocurrency is nothing new to many tech-savvy Russians.
The meeting comes on the heels of a 2,800% rise in the price of ETH over the last year, with Ethereum’s multi-functionality and API interface becoming springboards for heavily-backed capitalistic ventures. The transparency element of Ethereum is a motivating factor as to why so many banks and government institutions within Russia are looking to implement a blockchain solution to solve their financial woes. Although Russia’s interest in ETH is thought to have a big hand in its wild rise this year, don’t discount the probability that other world governments with financial problems will soon follow suit, meaning the price of ETH may not be in some ready-to-burst bubble, but fueled by an exponentially-growing number of users.