Can Bitcoin scale to keep up with demand created by Steem?

in bitcoin •  3 years ago 


I recently read an article by @eeks titled "Steemit is Bitcoin's Killer App". I think it is a great article and contains a lot of truth in the short term. But reading it got me thinking. Bitcoin may not be able to maintain its position of gateway to the altcoin world.

The Block Size Problem

The Bitcoin blockchain is currently at its maximum capacity. Fees are rising. Bitcoin supports about 300K transactions per day. This means that Bitcoin can only support 9 million people making one transaction per month. Going through an altcoin exchange requires at least 1 bitcoin transaction from an altcoin exchange to a bitcoin/fiat exchange.

Steem User Growth

Steem has the potential to grow faster and reach farther than any prior crypto. It is entirely conceivable that Steem could reach millions of people in the next year. If these people were to use Bitcoin as a gateway to buy in and/or cash out each month then it could more than saturate Bitcoin's capacity all by itself.

Even if Bitcoin doubles its block size, the combination of existing transactions and any new transactions generated by Steem users would saturate the network. Market forces and transaction fees would cause people to bypass Bitcoin. There is no reason for Steem users to get into Bitcoin except speculation when Steem Dollars are available for savings and commerce.

Steem onboards people to Steem

The people Steem reaches that Bitcoin couldn't will still have no use for most of the other cryptocurrency projects. Just because Steem is a cryptocurrency doesn't make learning the value of Steem the same as learning the value of Bitcoin and other crypto projects. People want STEEM because of what it does for them. The value proposition of other cryptocurrencies remains unchanged.

In fact onboarding users through Steem may make converting them to Bitcoin even harder. It would be like onboarding someone to a high-speed bullet train and thinking that it would in turn onboard them to old school wood burning steam trains. It is easy to convert people from old trains to new trains, it just doesn't work the same the other way around.

If Bitcoin and other cryptocurrencies wish to benefit from Steem's attraction of new people to cryptocurrency, then they will need to solve the scalability problem much faster than previously anticipated. Failure to scale means the market could pass them by all together.

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Very true. This only means to me that Steem's economy needs more on and off ramps including directly to fiat. You may not want to get into fiat, but I hope that some more third party services spring up to deal with this demand, especially if we cannot rely on Bitcoin in the long term.

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These fiat ramps will happen as Top Exchanges list STEEM. I'm sure Polo will be next to pick off that volume from Bittrex. Essentially, every BTC fiat ramp will become a STEEM ramp up to $10 billion. But Dan is worried about what happens at $100 billion cap. Then we need new solutions.

Excited that my piece could stimulate this! Thanks for the detailed response.

Steem onboards people to Steem

We'll see how it plays out. I see a rising tide lifting and legitimizing all ships. It brings more people closer and makes more people feel at ease. Bitcoin and crypto are just thought of as an inscrutable nexus of nerd scams to most people. Steem will be a bridge. And its own thing.

In fact onboarding users through Steem may make converting them to Bitcoin even harder. It would be like onboarding someone to a high-speed bullet train and thinking that it would in turn onboard them to old school wood burning steam trains.

This is salient. Bitcoin makes it hard but robust and perfect. Steem makes it easy and invisible. Pretty clear which will attract people more effectively.

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Your article is very eye opening. Thank you!

FWIW, I personally have found Steemit to be a great crypto intro for people. By the end of talking with them, they often are asking far more Bitcoin related questions than Steem questions, even though I've been trying to get these people into Bitcoin for years. It would seem to me that Steemit has given validation that crypto "works" to these people, so once they realize that, they immediately want to know about the Crypto OG.

That is definitely ONE of steemit's true value, the ability to bring people who have no interest in crypto's, into the crypto world.

Steemit is the bridge. It's beautiful.

We'll see! I've been away from the crypto world for a year or two, and based on my 2-day experience with Steem so far I'm absolutely blown away at how good the user experience has come.

AFAIK, Steem is doing something completely new in the crypto-finance world: it's giving people a non-technical onramp. Until now, to participate in the world of crypto, you've got to be savvy enough to either run rather sophisticated software (miners, BTS witnesses, etc), or you've got to literally buy in. Steem doesn't require anything like that - and that, as you know, is incredibly exciting. Good stuff is coming!

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  ·  3 years ago (edited)

I would argue that the user experience is not that great...yet. They have very little "default" social media features that are available as standard issue these days. It will only get better. Nothing wrong with being blow away but relative to their own potential it kind of sucks. Love the style so far though. Facebook is with more room to breathe.

Large brokers will start to sell STEEM directly. No question.

  ·  3 years ago (edited)

The bitcoin scalability issue needs to be fixed immediately. The community of people who want to keep the bitcoin block size that way drives me insane!!

you have voted on a couple of my postst so... starting a linux blog and tag I would love to hear from you.
https://steemit.com/linux/@joelinux/linux-1-lets-make-money-from-talking-about-linux-joelinux

I was next to you! )

Full steem ahead!

Interesting perspective. I'm going to have to wait and see. This coin has a lot of potential!! And the fact that it merges writing with cryptocurrency is amazing :)

I believe that as steem grows there will be more ramps to FIAT... I can see the likes of coinbase adding steem and also providing debit cards to its users. Smart entrepenours will go to the crypto with most users and looking at the past days stats I am sure that will be steem

A good article, I try to understand the contents of his writings

All aboard the Steem Train!
CHOO CHOO!

One way around this is to encourage the use of the Dash Network. There are several places where you can sell Dash to dollars online https://bleutrade.com/exchange/DCR/BTC, https://bter.com/, https://c-cex.com/. Dash has a higher blocksize limit than bitcoin (2MB instead of 1MB) and far fewer transactions, so there's plenty of room to grow.

Oh boy @dantheman ... you better hope the maximalist trolls on Reddit don't see this or you're gonna have to beat the pseudo-intellectual, 'bitcoin can do everything' arguments off with a stick :)

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too late, I already posted it on r/btc https://www.reddit.com/r/btc/comments/4squs4/can_steemit_break_bitcoin/
I actually want to hear their thoughts on the matter, notice I posted it on r/btc and not r/bitcoin since they tend to be more civil there..

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Aaaaand it got removed :D

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But by the author or the moderators? I believe when a self-post says [removed], it's the author that removed it. Could be wrong though.

Will just have to use Bitshares.

It is an ingenious self-sustaining ecosystem that benefits all who participate in it. If you contribute the stronger it gets and that is given back ten fold.

Where is my STEEM multi-sig wallet for iOS, I need it TODAY? Where is my STEEM/LSK currency pair, I need it TODAY? Where is my STEEM KYC/AML compliance, I need it TODAY? Where is my STEEM wordpress integration, I need it TODAY? Why can't I buy STEEM directly from my Bank, I need to TODAY? Why isn't (Insert missing feature here) developed yet, I NEED IT TODAY? The timeline for roll out on any of these features is months, if not years, and most of them already exist for bitcoin. And in those months or year where they may be developed for STEEM, Bitcoin will have that much more development behind it (like Lightning, etc etc). I am becoming a bigger fan of STEEM each day, but bitcoin is at least an order of magnitude more mature than STEEM, and comparing the two is not apples to apples. The future of Crypto is bright, and both STEEM and Bitcoin are a part of it.

good info, thanks

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i agree with you :)

Forgive my probable ignorance but won't Steem have scalability issues if it is storing all of this content on a blockchain?

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I believe Steem is using Graphene and some other Bitshares tech on the back end - from what I understand Graphene is the fastest and most efficient blockchain technologies available. Short answer is scaling will not be an issue.

Bitcoin blocksize can be easily increased to 2 MB blocksize or even unlimited Block size - the clients are out there ... Bitcoin will scale faster than Steem

🚅🚅🚅👍

Steem definitely looks poised to become the mainstream's gateway coin into crypto. However, once people are into Steem, I think the value proposition for Bitcoin (and others) will become much more accessible, due to the ease of exchanging digital coins (relative to fiat). Bitcoin is currently the most-trusted, defacto "reserve" digital currency. It may never have the capacity required to support worldwide retail or a social networking site, nor do I think Satoshi intended it to. Equally, Steem is social-media platform (and shopping destination?), not a place one would put large amounts of their savings for purpose of insulating themselves from various kinds of economic disruptions.

I want the bitcoin!!

Just Steemit!

I like most things about steem, but just don't put down bitcoin by taking one weakness and only talk about that. It has been put down by media and vested interest enough and bitcoin is still the greatest as the mother of all cryptocurrency. Steem will have enough problems of its own. The fact that we're having a discussion about the blocksize doesn't diminish the power of bitcoin and i am sure there are 100 solutions .

usually cryptos move with bitcoin, has bitcoin been affected by the rise in steem at all?

ok, nice post, but what's the point with all the random pictures? (this is common on other steemit posts too it seems) and is this article really worth $900+? this is what i don't understand about steem. do people actually believe that the community would put that much forward to read this?

"There is no reason for Steem users to get into Bitcoin except speculation when Steem Dollars are available for savings and commerce."

That is one genius thing steem has done which can outperform its competitors !. I guess that is essentially the true asset of steemit

Bitcoin needs to grow up quick!!

This is good to try new things give us

I'm glad that somebody with your philosophical aptitute and integrity was able to "solve" the onboarding problem so elegantly while providing the world of cryptocurrency geeks and enthusiasts a new challenge in form of the scalability issue. They still have some time - but I have that feeling that they are running out fast ;-)

I do trust that at all times your true inner vision will always be stronger than any temptations you will very likely be facing. Those might come from many angles - and I'm looking forward to witness your decisions.

I have not published yet and spent most of my time since I discovered you and Steem(it) over a week or so ago with researching your path within the cryptocurrency movement as well as your statements in the various videos available. I have a very good feeling about what I've discovered so far and am thrilled to be able to watch it all unfold.
In trust that you will never give up your vision I salute you Dan. Keep steeming! ;-)

Hi! Welcome to my blog @alex2016

I think this is a job for Elon Musk!

You make really good points in your article, what do you think about what I 'm talking about here? I think STEEM can overtake Ethereum in the next year
https://steemit.com/steem/@fabz89/steem-will-overtake-ethereum-in-the-next-year

Great blog, you have my follow and upvote, Im happy about your visit too!

where have you gone?, why no posts?

Bitcoin has been waiting a long time for mass adoption and this could just be the match that lights the dynamite 😃

This article stinks