Bitcoin Scaling Issues Forcing Facebook to Make Libra

Libra Facebook.

Bitcoin Scaling Issues Forcing Facebook to Make Libra.

Libra exists due to the presence of Bitcoin. As much as it proved by itself since Satoshi's creation laid the foundation for each crypto asset that was followed. The extent to which Bitcoin is responsible for spawning Facebook's currency has now been made very clear in an interview with Abra's Bill Barhydt. The investment platform CEO claims that Facebook wants to integrate BTC directly into its billions of powerful social networks - but was forced to create Libra instead because of Bitcoin's inability to scale.

How is the Inability of Bitcoin to Weigh Libra Projects Issued

On the What Bitcoin Did podcast last week, host Peter McCormack entertained Bill Barhydt of Abra, who revealed insider knowledge about the development decisions that guided Project Libra. Before Facebook went ahead with plans to create a stable currency, Facebook had explored the possibility of integrating Bitcoin, Barhydt claims. The plan is to activate BTC as a payment option in the entire Facebook ecosystem.

"Ideally, from my discussion, [Facebook] actually prefers using Bitcoin. I think there are people who really believe in this system, "ventured Barhydt. The idea of   Facebook supporting BTC in the world's largest social network, and it's likely that the second and seventh largest (Instagram and Whatsapp) might seem strange, and we might not be never known for sure whether this was the original plan, but Bill Barhydt was well connected, and so his comments were quite influential, when he told Peter McCormack:

If you want to build a money transfer system and you want to build a cross-border trading system and you have 1.2 billion users today, what will happen to Bitcoin? Costs will skyrocket. Doing anything with Bitcoin that is transactional effectively cannot be maintained.

LIBRA DEEP DIVE

Why Bitcoin Will Not Scale

Facebook embraces Bitcoin, regardless of what people think about the tech giant, it will be very bullish for BTC and for the cryptosphere as a whole. The 1.2 billion people who are introduced to healthy money, even in a clean Facebook walled environment, will be huge. That did not happen, due to the inability of Bitcoin to support the number of transactions that could potentially flow through the network as a result.

The inability of Bitcoin to scale has certainly been a matter of intense debate in the community for years, causing deep cracks and resulting in permanent divisions that occurred when Bitcoin Cash was cut in mid-2017. BCH supporters have long accused the developers of Bitcoin Core, led by Blockstream loyalists, who do not want to substantially increase the block size to allow more transactions per second (tps). Since increasing the block size to four times the BTC, BCH can theoretically process around 100 tps, and offer transaction costs that are currently 113X cheaper.

Increasing block size is a simple but effective scaling solution that has allowed Bitcoin Cash to process hundreds of thousands of transactions a day on a test - more than enough to absorb the demands of large companies like Facebook that are entering into a fuss, for example. Critics will note that there are limits on expanding block size, beyond that centralization occurs because of the difficulty of users being able to run nodes to verify transactions independently. The sweet spot beyond the unwanted need to continue to increase the block's capacity blindly is a matter of debate. What is clear, however, is that the decision by Bitcoin Core developers and their helpers to keep the BTC blocks as small as possible has pushed businesses away from Bitcoin and reduced merchant adoption.

Adoption of Emptiness

Instead of scaling Bitcoin, Core supporters have pushed the layer two solutions they are very proud of, Lightning Network, to take the burden. But there is a problem with that approach: Lightning is still not ready for production, and maybe years away from being suitable for company adoption. Only last month, a critical bug was discovered in the protocol, considered so severe that it wasn't even revealed until all nodes had the opportunity to update to patched software. The incompatibility of Bitcoin as a payment system, coupled with the Lightning mismatch for almost anything other than buying stickers, has led to an adoption vacuum. Businesses, including Facebook, if Abra's CEO wants to be trusted, wants to use the network but can't do it.

'These are smart - people,' said Barhydt from the Facebook blockchain team. "They have seen Lighting, they have seen Bitcoin, they have thought about this. And they came to the conclusion that Bitcoin is not optimized to be a payment network, Bitcoin is optimized to be digital money now. "Proponents of Bitcoin Cash will agree that BTC is not optimized to function as a payment network, but will refuse at the time. Suggestions that it is capable of functioning as digital cash now - it is a use case that BCH is currently fulfilling more successfully.

Even with larger block size, there may be technical or other regulatory obstacles that prevent Facebook from using BTC. What can be stated with certainty, is that the inability of Bitcoin to scale, coupled with the complexity of Lightning, and the security issues and UX that accompany it, has created a perfect storm. Into this vortex eye has stepped on the Libra Project, the biggest demonstration yet of what happened when the P2P payment network stopped functioning as digital money.

Do you think Facebook is seriously considering using Bitcoin? Let us know in the comments section below.