The Bitcoin network has a fixed logical limit which it has been close to this limit for months. Neverthless, the warring factions in the bitcoin “community” have not yet been able to agree an update in a commonly-agreed formula for updating the capacity of the blockchain — the digital open ledger on which all transactions are recorded. Many experts had been predicting that if the community could not agree, then the network would get slower and slower. 

This week the network reached its capacity, causing transactions around the world to be massively delayed, and in some cases to fail completely. The average time to confirm a transaction increased from 10 minutes to 43 minutes. Shops that once accepted Bitcoin no longer do.

Transaction time and cost increase

Victoria Conroy writing in Payment Cards & Mobile, explains that “Bitcoin transactions are confirmed every time miners create a new block on the networks chain. Each block takes about ten minutes to mine, and can hold 1MB of information. At current volumes, there are more than 1MB worth of transactions asking to be confirmed in that time. To solve this bottleneck, many in the Bitcoin community have called for increasing the block size to 2MB.”

Howeever, she continues, “It has proven to be a highly contentious issue. A schism has developed between the team in charge of the original codebase for Bitcoin, known as Core, and a rival faction pushing its own version of that open source code with a block size increase added in, known as Classic.” Not surprisingly, the two sides have allegedly been using increasingly aggressive and dirty tactics.

The result of the running out of network capacity is that the processing times and the transaction charges have increased dramatically.

No early solution 

Also, Conroy sees no early solution as, “far the debate is dragging on without one side claiming a clear victory, leaving tens of thousands of consumer transactions stranded in limbo.”

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CTMfile take: Richard Walters, writing in the Financial Times, highlighted how a global payment network cannot be hostage to the rivalries and brinkmanship of different technology groups. Does this politicing show the limits of the Bitcoin dream?