Ethereum co-founder, Vitalik Buterin, believes that Bitcoin’s scaling problem has caused more losses than the amount lost in the infamous Mt. Gox hack. Both the transaction fees and times have been gradually increasing, causing investors to incur huge loses over the past few months. His Medium post reads in part:
“Now I personally can see that it’s not axiomatically true that doing nothing is safest, especially in the context of a changing environment (for example I continue to believe that Bitcoin’s *failure* to raise its block size by a significant amount in 2016–17 was a travesty and a great violation of many people’s expectations of the protocol, and one that led to more total losses due to excess tx fees than the amount lost in the MtGox hack), but this is the argument that you need to be arguing against.”
In his Whitepaper, Satoshi Nakamoto describes Bitcoin as a P2P electronic cash system. As the currency started to become more popular, however, its network became plagued with ridiculous fees and slow transaction times. At the end of 2017, for example, the transaction fees reached as high as $60 per transaction.
Bitcoin block size
Bitcoin blocks have a size limit of 1 MB. While increasing the block size limit is feasible, it reduces the miner’s profitability. Enlarging the block might benefit the larger miners at the expense of smaller miners. That means a few people will gain control over the network, thereby centralizing it. As you know, centralizing the system goes against Bitcoin’s fundamental goal of becoming a technology developed and managed by the consensus of the community, without the influence of any single person or group.
Mt. Gox hack
The Mt. Gox hack which occurred in 2014 is arguably one the biggest crypto thefts in history. Bad actors stole around 850,000 BTC, worth approximately $450 million at the time of the incident.