Category: 4. Bitcoin’s limitations

Knowing that Bitcoin has limitations may feel a bit like realising your favourite Super Hero has a weakness, but this was always part of the design. On-chain bitcoin transactions are best suited for high value, infrequent payments; in other words, the Store of Value use case. From previous lessons we know that money must also… Continue reading The Trilemma and the future

The two options so far for addressing problems of Bitcoin scaling as a convenient medium of exchange have looked to either adapt the Bitcoin design, or build on top of it. The third area of innovation retained Bitcoin’s basic concepts but compromises on how it is implemented, creating what are now known as alternative coins, alt coins for short. A commonly used term to refer to cryptocurrencies that came after Bitcoin; literally alternative coins, i.e coins that are designed to work differently from Bitcoin. The most important cryptocurrency after Bitcoin is Ethereum. Though there are some similarities in their use as digital currencies, Ethereum has a much grander ambition – as a world computer… Continue reading 3 – Sacrifice one of the concepts (Altcoins)

As you read more about Bitcoin you’ll probably come across the term ‘layer 2’. The concept of layers sees Bitcoin as the base layer, with transactions recorded in blocks connected across an ever-increasing chain.  What happens on the base layer is often referred to as happening ‘on-chain’. Transactions that happen on-chain are subject to the… Continue reading 2 – Build the missing functionality on top (Layer 2)

Bitcoin was built to be open source, so anyone that doesn’t like the rules can simply make a copy and create their modified version. This is known as a Fork.  To date there have been 105 Forks, which underlines that in many people’s eyes Bitcoin’s design has flaws. It should also be seen as both underlining… Continue reading 1 – Change the rules (Fork)

If you’ve worked your way through the two previous articles in this section you should have learned the following key things.  Cryptocurrency fulfills all the characteristics of sound money. Bitcoin was the first, and most influential, cryptocurrency. Its creator was Satoshi Nakamoto – publishing its blueprint in 2008. How Bitcoin works to achieve a digitally… Continue reading Bitcoin`s limitations

What you`ll learn An introduction to the Blockchain Trilemma Why Bitcoin struggles as a medium of exchange How forks, layer two applications & altcoins attempt to solve the trilemma The future of Bitcoin