Transaction fees could “rise and rise to the point where only rich people can transact” if block sizes aren’t increased, according to Gavin Andresen, Chief Scientist of the Bitcoin Foundation.
Speaking at the Bitcoin2014 conference today, Andresen warned that if steps aren’t taken to either increase the rate at which blocks are created or to persuade miners to include more transactions in each block (therefore increasing their size), transaction fees could skyrocket.
In the annual ‘State of Bitcoin’ address at the Amsterdam event, Andresen also called the Dark Wallet project “fantastic”, saying that “more privacy is better” and rejecting the distinction that technology is good or bad: “Technology is what it is. Regulations will evolve and the software will evolve [too].”
Explaining his decision to step down as bitcoin’s lead developer in April, Andresen said “as the [bitcoin] project gets bigger, it makes sense to specialize.” That move is part of a wider strategy of specialization that includes the bitcoin code itself, he explained:
“We’re trying to modularise the code more. Satoshi gave us a bit of hairball – we’re teasing apart the different pieces of functionality, because as you grow you want to specialize.”
Success not guaranteed
Touching on so-called 'Bitcoin 2.0' projects such as MasterCoin and Ethereum, Andresen suggested they might meet the same fate as the Segway: “Segways are really cool, but they're not mainstream. A lot of Bitcoin 2.0 projects might find the same thing.”
He also noted that the community wouldn’t discover whether such projects were truly secure until they were already protecting valuable assets, a chicken-and-egg problem that bitcoin also faced:
“We didn’t find out that bitcoin was not secure until it gained a value and became interesting to attack. The very first version of bitcoin was horribly unsecure.”
Bitcoin transactions take priority
More generally, Andresen reassured the audience that the main focus for bitcoin’s core developers is still to ensure “the core bitcoin network processes transaction as reliably as possible” and announced that Cory Fields, a bitcoin core developer, is now employed full-time by the Bitcoin Foundation to work on the Bitcoin Core code.
Taking questions from the floor, he defended his comments about mining and transaction fees, saying that they are a matter of “pure supply and demand”, but said he was open to being persuaded otherwise.
Earlier in his talk he said, “I still don’t care about mining [except] in the way it affects user experiences. I’ve been really concerned about the number of transactions miners include in their blocks.”
With regards to the future development of bitcoin, Andresen said that creating good forums for discussion was crucial, and joked that he really wanted someone “to solve the Internet troll problem.”
Image by Kadhim Shubber