Bitcoin’s growth – not government regulation – could kill bitcoin, according to one financial industry observer. David Yermack, chairman of the New York University ( NYU ) Stern School of Business finance department, told Fortune Magazine that bitcoin’s growth has jammed its payment system to the extent that some transactions take hours to process.
He said tens of thousands of unprocessed transactions are queued up, and bitcoin-accepting vendors are opting out of the network.
“It’s like trying to fit more cars on the highway where the highway needs to be widened at some point,” he said. Decentralization: Good And Bad
Yermack called it ironic that bitcoin’s democratic process, afforded by its decentralized nature, made it popular but is now undermining it. The service currently has thousands of miners to clear a transaction. For the system to grow, the miners must agree on a solution to the current problem.
He said people saw the bottleneck coming.
Members who have invested thousands of dollars to mine bitcoin stand to lose their investment once the system changes. Those with the fastest computers – most of whom happen to be in China –are still profiting, Yermack said, and these individuals, therefore, have no reason to change the rules of the bitcoin system since others will benefit at their expense. Yermack Keen On Blockchain
Yermack last week told Business Because , a news site for business schools, that blockchain’s potential appears to be “enormous,” noting that most of the big banks and other financial institutions are looking closely at the technology. The NYU Stern School of Business was one of the first to teach the blockchain in an MBA program. Last year it launched its executive course. Now they are exploring what is poised to disrupt it.
Fortune noted that besides the bottleneck Yermack referenced, other […]
