We’re all too often told about how Crypto should be about peer-to-peer payments, without banks or the need for a middle-man, and without interference from government or any other authority. Very rarely do we see it used for anything of the sort, but rather more as “speculation”.
Don’t worry, this post will be a fair amount shorter than most of my other recent ones!
In the original Bitcoin whitepaper, it starts off with “ Bitcoin: A Peer-to-Peer Electronic Cash System”, but yet at a mere 4 transactions per-second (7 if they’re all SegWit transactions), how well can Bitcoin scale? The answer is a resounding: Poorly
I’m going to take a bit of license here regarding some numbers, so they’re not “hard and fast facts”, but, you should have a good idea of what’s needed in order to take cryptocurrency to the masses, and why I’ve been pushing so much for DigiByte to be used in Cúcuta.
This all started when somebody posted a comment to David Hays latest video about what’s been happening in Venezuela and the progress that’s been made. David also gave a really nice shout-out to DigiByte for the donations we’ve done so far outside of the Crypto Cúcuta project, but to those in need. The comment that annoyed me was:
It’s unfortunate the poster missed what this Crypto Cúcuta project is all about:
Real-world usage of cryptocurrency in the way that people have been describing you should / could use cryptocurrency, for years now!
All too often we read in whitepapers and on websites about how “Crypto can change the world”, yet nobody ever actually does anything aside from hypothesize about it. This is why the Crypto Cúcuta project matters, because this will take cryptocurrency mainstream, to the masses, to be used in peer-to-peer electronic payments. To be used without any central bank or clearing-house, and without interference from government.
We’ve seen the Venezuelan government poorly manage the countries finances and the bolívar, so there is little reason to think that them doing this with the Petro will be any different.
The goal here is to take cryptocurrency and to provide 300,000 people with 2-weeks worth of salary in that cryptocurrency, and give it to the refugees in Cúcuta.
This is where the rubber meets the road, and why scaling matters!
Now, I do about 1–3 daily on my EFTPOS / Credit Card, I don’t use cash, so this is where I’m taking some artistic license for the sake of the example regarding numbers.
Let’s do some basic math and presume that we have 300,000 people who are all using bitcoin to transact from their Cellphones. Each person does 1 transaction per-day, we’re looking at 300,000 transactions. Nice easy number to work with. Let’s assume to start with this all takes place over 12 hours of “daytime”, and let’s also (naively) assume that there’s no lunch-time or dinner-time rush.
In the first scenario we see this adds 6.94 transactions per-second. Bitcoins limit even with SegWit is ~7, so we’ve already flooded Bitcoin. I can’t stand Lightning Network and it’s no good for P2P / Mobile payments (Can’t be offline etc) and it’s not “P2P”, but you’ve heard my rants previously on why I hate LN.
So Bitcoin is out of the question already. We knew that though.
The 2nd scenario is 300,000 people making their transactions in an 8 hour period. I bolded the “8” but it didn’t show too well, anyway.
This adds 10.42 TPS to the network. Bitcoin is long toast at this stage, and we’d basically break Ethereum given they’re already doing a few TPS.
In the 3rd scenario we do 2 transactions per-user per-day just to see what would happen for Cúcuta adoption, so at 20.83 we’re pushing half of Litecoins TPS limits, though things like Dash (32 TPS) aren’t going to last too long, however Nano (Sustained 100TPS) still seems viable.
In the 4th scenario, we see what would happen if half of all of Venezuela were to jump onboard (15.8 million people) doing just one transaction per-day. At this point we’re pushing the limits even of DigiByte (560TPS), were they to all to start using us overnight. Even Nano at a sustained 100TPS is well out of the picture, and we’ve exceeded Litecoin and Bitcoin Cash’s 56TPS long ago. Bitcoin on their 4TPS are nothing more than a horrible reminder of how bad things were in December 2017 at this stage.
In the 5th scenario we have the entire country of Venezuela using cryptocurrency and so at that stage we’ve even sailed past DigiBytes usefulness and it would rely on the next stage of DigiSpeed having been implemented to further double our transaction processing.
All of this paints a sobering picture about how underwhelming so many blockchains are, and how under-equipped their processing speed is.
I for one am grateful for DigiSpeed and our block size doubling every two years, to double our processing capabilities. This just goes to show the importance of why we will be capable of handling 280,000 TPS by 2035 because any kind of even adoption would cause many blockchains to simply freeze up and be completely un-usable!