If you’re like my Dad, you’re getting really excited about all the buzz surrounding cryptocurrency, but you’re also trying to understand what the heck is happening all at the same time. Here’s the challenge. Most people understand things like the stock market and physical real estate, but when it comes to investing in 1’s and 0’s, whether it’s domain names or Bitcoin, things get complex.
Oh and it doesn’t help that really understanding Blockchain at anything below a surface level probably requires a PhD in math. Okay, maybe I’m just being dramatic but suffice it to say that cryptocurrency and the underlying technologies (and math) behind it is complicated no matter how you slice it.
This complexity makes all the news about Bitcoin scaling all the more confusing for most people so I thought I’d try to break it down at a very high level. I’ve actually been doing this for my Dad who is really trying to understand the details of what’s going on so thought I may as well share with my blog readers as well.
Before I go any further I also want to make sure you know that I am FAR from a cryptocurrency expert, I haven’t made a small fortune with Bitcoin and I don’t have a lot of money invested in cryptocurrency. That being said, I did make a nice profit on Bitcoin last year (over 100% ROI) and just recently made investments in both Ether and Litecoin. So I guess I know enough to be dangerous.
Okay, so here we go.
Bitcoin Scaling 101
The basic idea: People want to see Bitcoin support greater transaction volumes
The complexity: People don’t agree on how they want to do this
The proposals: There are three proposals on the table (that have gained the most steam) for increasing transaction volumes, one is called SegWit2x, BIP 148, and BIP 91. I know, who names these things?
The risk: Nobody agrees (what’s new) and some people are threatening to revolt which would, uh, make things super awkward and likely have a ripple effect on cryptocurrency prices.
The day of reckoning: The plan is for this to all go down August 1st so cryptocurrency prices could jump way up or way down leading up to and after this date. I personally like taking risks (i.e. I don’t mind losing all the money I put in here) so am betting that it is going to go up and am buying crypto now.
Where to learn more: Just read this article, it not only covers all the basics but also gives you links to places where you can do a deeper dive if you really want to get geeky.