In the last debunking articles, we mainly answered the cliches coming from “no-coiners”, i.e. people who don't own cryptocurrencies or bitcoins. However, outsiders don't have a monopoly on abusive criticism of Bitcoin. A lot of misconceptions come from supporters of other cryptocurrencies, called altcoins. This is the case of the cliché that we are studying today.

A lot of altcoins are just pale, slightly modified copies of Bitcoin. Their arguments are often that the Bitcoin payment system is too slow, that it only supports a limited number of transactions, or that it is devoid of any form of innovation.

In my article on altcoins, I explained to you why the modifications of other cryptocurrencies are dangerous for their users, and how this contrasts with the very nature of Bitcoin. Here, I want to explain to you why the technical choices that make Bitcoin “slow” are not limitations, but essential compromises.

Why aren't Bitcoin transactions instant?

The blockchain is a timestamp server used to prevent coins from being double-spent on Bitcoin. The Nakamoto Consensus mechanism ensures that, on average, a valid block is found every 10 minutes.

When completing a transaction, it is generally advisable to wait for 6 confirmations (i.e. 6 blocks) to consider this transaction as unchangeable. This means that we have to wait an average of one hour (6 times 10 minutes) for a Bitcoin transaction to be really confirmed.

In the age of instant transfers and credit card payments, some people think that Bitcoin is already technologically outdated.

In reality, when you pay for your baguette by credit card, the baker does not receive the money immediately. It usually takes several days before it's actually in your bank account. Moreover, the transaction is not irreversible immediately. It is still possible to file a claim on this payment up to 13 months after the exchange.

From a probabilistic point of view, on Bitcoin, the settlement is irreversible after only 6 confirmations. In our example of buying a baguette, this means that the baker is convinced that the bitcoins belong to him one hour after the exchange has been completed. In the case of the banking system, it's over a year.

However, this limit of 6 confirmations is a high estimate. Once a transaction has passed 3 or 4 confirmations, it is extremely rare that it only ends up in an outdated chain.

Of course, for some everyday purchases, it can be annoying to have to wait for a certain number of confirmations to complete a transaction. That's why there are superior payment systems, built on top of Bitcoin. This is the case, for example, with the Lightning Network, a payment system that allows bitcoin transactions to be made almost instantly and at very low fees.

Also, let's keep in mind that Bitcoin is an electronic cash system. Even if today, its framework goes well beyond this mission, it was originally designed to provide the Internet with a payment system equivalent to cash. For this specific purpose, the 6 confirmations are not annoying.

Since these 6 confirmations can cause some friction during use, it is entirely legitimate for some to question the possibility of accelerating the pace of block generation. Since it is necessary to wait for several confirmations on Bitcoin, why limit each validation to a period of 10 minutes?

➤ Learn more about the proof-of-work mechanism on Bitcoin (Proof-of-Work).

Why a block every 10 minutes?

Let's say it, the 10-minute interval between each block is an arbitrary choice by Satoshi Nakamoto. However, this interval was certainly not chosen at random. This target time between each block represents a security compromise.

To understand this, it is important to review how a valid block is distributed in the network. When the miner Bob finds a block that gives a valid hash (less than or equal to the difficulty target), he hastens to broadcast it to the Bitcoin network in order to receive his reward. The knots in contact with Bob will check that his block is valid, then they will broadcast it in turn. This broadcast process continues until all nodes and miners in the system are notified of the existence of this new valid block.

This verification and dissemination process takes some time. It is limited by each person's bandwidth and computing capacities.

Let's say Alice is another minor. Because of network latency, Alice had time to find a valid block at the same height as Bob's, before being informed that Bob had also found a block. Since Alice has broadcast her block to her peers, the network is now split in two. One part mines over Alice's block, and the other part mines over Bob's block. This is called a division of the network, or a “split” in English.

These Bitcoin divisions are perfectly natural and not serious. When one of the two subnetworks exceeds the other, by mining a block on top of it, the whole network rebuilds consensus on a single chain. The invalid chain is abandoned, along with the outdated blocks it contained.

The problem with these splits is that some of the miners are working on a channel that is going to be abandoned. They don't know it yet, but they're working for nothing. This creates a waste of computing power, and therefore a decrease in Bitcoin's security.

In terms of probability, the lower the interval between each block, the more frequent these network divisions are. It should then be understood that lowering the interval between each block also lowers the overall security of the Bitcoin system, while wasting resources.

However, you cannot increase this interval to infinity. Periodically, the system must anchor the proof of work carried out in order to progressively make transactions unchangeable. Satoshi Nakamoto felt that a 10-minute interval was an interesting compromise. This allows time for each block to be broadcast all over the planet, despite the latency, in order to avoid network divisions.

From the point of view of the Bitcoin user, the target time between each block does not really have an impact on their waiting time for their transaction to be unchangeable. Indeed, what really matters is not the number of blocks that are on top of his transaction, but the accumulation of work since his transaction. Whether it is a target interval of 2 minutes, 10 minutes, or 20 minutes between blocks, this does not affect its waiting time to obtain the desired guarantees of immutability.

Why are blocks limited to 1 megabyte?

Since the 2017 SegWit update, the subject of block sizes has become quite complex to understand.

When Bitcoin was launched in 2009, there was no limit to block size. This flexibility was quickly rectified by Satoshi Nakamoto in 2010, setting a limit of 1 megabyte (1 MB). This threshold remained unchanged until August 2017, when the SegWit update changed the rules.

The aim of SegWit is to correct the malleability of Bitcoin transactions, in particular with the aim of allowing a more secure implementation of the Lightning Network. To do this, transaction witness data, i.e. mainly signatures, are separated from the transaction itself. These cookies are stored in a separate data structure.

Thanks to the displacement of the signature scripts, SegWit takes the opportunity to virtually increase the size of Bitcoin blocks. To consider these changes, SegWit plans to use a new virtual unit to calculate the block size. This is what we call “weight” or “weight” in English.

Thus, the weight of the block is calculated as follows:
weight = 4 * size of the block without witness + size of the witness

The total limit for Bitcoin blocks is currently 4 MWU (Mega Weight Unit). In terms of real size, a Bitcoin block can theoretically now reach 4 MB. However, they rarely exceed 2 MB.

Why does this limitation exist? Why not allow more block transactions?

The main argument for the increase in block size is the same as for the previous part for the 10 minutes. If the blocks are bigger, they will take longer to broadcast within the network. This is due, on the one hand, to the bandwidth required, and on the other hand, to the time it would take for each node to verify each transaction in the block before continuing to propagate. Thus, an increase in block size would necessarily cause more network divisions, outdated blocks, and reorganizations.

Additionally, an increase in block size would also affect the resources needed to run a full node, reducing system distribution and resilience in the process.

Is the Bitcoin protocol continuing to innovate?

There is also a misconception that Bitcoin is a very slow old dinosaur, which never innovates, unlike altcoins. In reality, Bitcoin is constantly evolving. It is often even several years ahead of altcoin innovations.

First of all, many of the standards used on other cryptocurrencies came from the development on Bitcoin. For example, if altcoiners benefit from a simplified way to retrieve their crypto wallets, it's thanks to bitcoiners. The recovery phrase and cryptographic key derivation standards of altcoins are often dependent on BIP32 and BIP39, Bitcoin innovations.

To give you another example, the construction of receiving addresses is an area in which Bitcoin is about ten years ahead of altcoins. If you use SegWit V0 or V1 (Taproot) addresses, they have a checksum built from error correction codes. This innovation makes it possible to prevent users from losing bitcoins by sending them to addresses for which they do not have the associated private key.

For example, on Ethereum, addresses barely have a checksum with a hash function (EIP-55), and these are not even verified on all existing wallets.

The Bitcoin developer community is also very active on all the cryptographic primitives used. These standards are then reused on a majority of altcoins.

It is therefore important to differentiate between substantive innovations, which almost always come from the Bitcoin community, but which do not necessarily make a lot of noise, from the misleading and media innovations of altcoins.

Of course, Bitcoin's innovations at the protocol level are very slow. It is a tradition in the development of Bitcoin that is meant to be careful, controlled, and thoughtful. However, many disruptive innovations are being made at the application level, or on overlay systems such as the Lightning Network.

Conclusion

It is important to understand that the limitations of the Bitcoin protocol are not mistakes, but technical compromises. The block size limit and the 10-minute interval make it possible to avoid network division phenomena. These splits cause a waste of miners' computing power, and therefore a decrease in the overall security of Bitcoin.

For the user of a distributed payment system such as Bitcoin, the speed of payment is not the key metric to monitor. As there is no central actor to guarantee the immutability of the transaction, it is the accumulation of proof of work that is authentic. However, the frequency with which blocks are published does not change the amount of work accumulated in these blocks.

In terms of development, the innovations brought about by the Bitcoin system are often misunderstood or forgotten. A majority of altcoins claiming to be disruptive are in fact completely dependent on standards originally invented for Bitcoin.

Bitcoin is comparable to fine watchmaking, requiring gradual and meticulous adjustments. The long-term impacts of these changes are complex to anticipate. That's why protocol updates are carefully studied, thought through, and monitored.