The Leftover Bits: 5/5/15: Bigger Blocks, GBTC Trading Is Slow, Hardware Wallet Gets Mainstream Attention

The Leftover Bits is your source for daily bitcoin news with a focus on what is really important in the world of cryptocurrencies.

Hardfork For Larger Blocksizes Likely

Bitcoin Core Developer Gavin Andresen has stated that he will issue a pull request for Bitcoin Core 0.11 that will increase the blocksize limit beyond its current 1MB restriction all the way to 20MB.

While much of the Bitcoin community is happy to sit back and let the developers bicker about what happens in core development, this change will be significant and could have long term implications for Bitcoin’s future.

Bitcoin does have scaling problems, and the block size limit is the the basis of all of that. Only so many transactions can fit into a block and the number of blocks mined depends on how much hashing power is on the network. That means Bitcoin usage and adoption has to mirror the growing hashrate of the network and no faster, at least in theory.

Fixing this will require a hardfork, no easy task for a coin the size of bitcoin, but Andressen sees the advantages as something worth the effort.

There are several proposed solutions to the scaling problem, and many who argue it is not something we have to worry about in the short term. I’m not here to take sides. Gavin Andresen says he will address the other proposed solutions as well as the idea that the blocksize limit isn’t a problem, in future blog posts. Three of those blog posts have been released and you can read them here, here and here.

In the meantime, just understand that it seems unlikely that Andresen will change his mind anytime soon, and it is just as unlikely that the majority of the community would not upgrade and sabotage Andresen’s plan, even if some do it while kicking and screaming. So, expect a hardfork soon, and larger blocks sometime next year.

GBTC Launches, Does Not Impress

The day many had been waiting for finally arrived. The Bitcoin Investment Trust’s GBTC started trading publicly on off Wall Street markets, but seemed to have no appreciable effect on price and liquidity was shockingly low.

While trading had been unofficially open for weeks, few could access it until yesterday when a major OTC Market provider accepted GBTC. After a full day of “regular” trading, only 76.5 bitcoins were traded (or 765 shares) a far cry from exchanges that perform orders of magnitude more than that. GTBC is currently priced at $55 a share (or $550 per bitcoin) but traders are unable to take advantage of the arbitrage opportunity because traders cannot quickly switch between GBTC, Bitcoin and fiat.

Still, it is a nice step for Bitcoin towards the mainstream. Grandmas, blue collar workers and Luddites can now easily bet on the price of Bitcoin. Users commented about using Fidelity and USAA accounts to buy GBTC shares, and that is not insignificant. [An extra hat tip to BTC Magazine’s Jacob Donnelly for noticing that tweet]

It just doesn’t look like it will be the catalyst for a price jump like some were hoping.

Hardware Wallet Case Launches At Disrupt NYC

At TechCrunch’s Disrupt NY conference in New York City, hardware wallet Case was revealed and it has started to gain some attention from Bitcoin media sites thanks to its slick design, ease of use and seemingly stringent security practices.

It uses a fingerprint scanner, a built in 3G GSM chip, and multisignature technology in order to keep things safe. The idea is to make something more accessible than an offline wallet but more secure than an online wallet.  We will see if they have succeeded when the public gets their hands on the device. It is planned to launch for USD $200 and is taking pre-orders now.