Weird that in all the coverage of Bitcoin I have read over the years, this is the first article I’ve seen dealing with its absurdly low rate limit,
The problem is caused by Bitcoin’s design, which is capable of processing at best only seven transactions per second. This week the currency, which is powered by a decentralized network of computers run by people and businesses around the world, hit its capacity limit. A backlog of stranded transactions has built up. (There is debate as to whether this happened naturally, or by a person or group intentionally trying to cause problems for Bitcoin.)
At the time of writing there were about 20,000 Bitcoin transactions waiting to be processed. Some will go through much sooner than others.
You can attach a fee to a Bitcoin transaction for priority processing, and some Bitcoin software automatically suggests or sets one that will get you prompt processing. People using software that doesn’t adjust like that have found themselves cut off. Individual Bitcoin users and businesses have complained of transactions expected to go through in minutes getting stuck for many hours, or even days.
Now that’s a scaling problem.
A lot of the coverage of Bitcoin makes absurd claim that Bitcoin transactions are anonymous, even though the Bitcoin Foundation itself makes clear that there is little privacy in Bitcoin,
Some effort is required to protect your privacy with Bitcoin. All Bitcoin transactions are stored publicly and permanently on the network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances.
Zerocoin is an effort to add anonymity to Bitcoin at the protocol level in order to create a truly anonymous ecash solution,
- Zerocoin operates in the Bitcoin network and is implemented as a series of extensions to the existing Bitcoin protocol. This approach means that Zerocoin can be deployed without relying on a central coin issuer or bank (as used in previous e-cash schemes). Moreover, since no single trusted party operates the Zerocoin system, attacks on Zerocoin must take on a substantial fraction of the Bitcoin network.
- Zerocoin uses provably secure cryptographic techniques to ensure that Bitcoins cannot be traced. These techniques allow users to conduct transactions on the Bitcoin network while receiving strong mathematical guarantees that the transactions cannot be traced. These guarantees remain in place even if a portion of the Bitcoin network is compromised by an attacker.
- Other anonymous cash systems rely on distributing the work of anonymizing users amongst a set of parties. This approach works well if all parties are fully available but can be subject to “denial of service” attacks where a small number of nodes are taken offline. Because Zerocoin is built on top of Bitcoin, it is widely distributed among all the Bitcoin peers, ensuring that the system can remain available even when many nodes are compromised.
Matthew Green of John Hopkins University and one of the creators of Zerocoin gave a presentation at Microsoft in 2013 outlining how Bitcoin users can be easily be de-anonymized and how Zerocoin would provide anonymity for crypto-currency users.