In reviewing recent reading and copying quotations into my journal, I came across this, from “Meet the Man Who Really Built Bitcoin,” an article on Gavin Andresen in the Upfront section of the November-December 2014 MIT Technology Review:
The Bitcoin network is incapable of processing more than seven transactions a second, a tiny volume for a technology with global ambitions. (Only about one Bitcoin transaction is made per second today.) Visa processes almost 480 transactions a second worldwide and can handle up to 47,000 a second.
This is a major obstacle to the widespread use of Bitcoin, which I hadn’t heard about elsewhere. Bitcoin has other potential problems too. The MIT TR article mentions one: “the mining process, which also serves to verify transactions, is designed to gradually pay out less and less over time until 21 million bitcoins exist.” Conventional currencies allow for growth by increasing the money supply; in its current form, Bitcoin has no way to do that. Come to think of it, there’s a second problem here. Once the incentive for transaction processing vanishes, who’s going to do it?
Both of those are questions for the future, as is the processing speed. Something that already matters is the size of the block chain, which is essentially a record of transactions. If I understand correctly, a Bitcoin client (the software program that you run on your computer or mobile device) has to be up-to-date on the block chain before it can create a new transaction (that is, before it can send or receive money). So, if you decide today to download and install a client, you’re going to have to wait a few days for it to catch up on the block chain before you can use it. Possibly I’m wrong and you can use a newly installed client right away, but in any case your software won’t reflect the fact that, say, you sent money to Mr. X until it has received the full block chain. This isn’t an insurmountable hurdle, but it does mean that you can’t be impatient about getting into Bitcoin, which is not the case with any of the major conventional currencies: if you want euros, for instance, you certainly don’t have to wait days to get them.
Incidentally, MIT TR follows what seems to me the only sensible style: the software and the overall scheme use a cap letter, as in “the Bitcoin network,” but the units of the currency are referred to in lowercase, either singular or plural as the situation calls for, as in “21 million bitcoins.” The latter is, I believe, the case for all currencies except those whose name is derived from a proper noun: pound sterling, krona, Deutschmark. Why publications such as The New York Times can’t figure this out is beyond me, as it’s mostly a matter of common sense. You’ll never see anyone mention “payments in Dollar” or “the price of Dollar,” but a quick glance at recent NYT references shows “payments in Bitcoin” and “the price of Bitcoin.” Here as elsewhere, sense and practice sometimes go separate ways.