Bitcoin 101, Cryptopedia

Bitcoin Scalability Issue

Just few years after Bitcoin announced to the public, it faced a problem called “scalability”. It means, that it takes longer for a transaction to get confirmed in Bitcoin...

Written by Wallebi Author · 2 min read >
Bitcoin Scalability Issue

Just few years after Bitcoin announced to the public, it faced a problem called “scalability”. It means, that it takes longer for a transaction to get confirmed in Bitcoin network compare to other payment methods. In this article we are going to talk about Bitcoin scalability issue.

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Scalability issue in Bitcoin network

Scalability was a big challenge for Bitcoin. In fact, Bitcoin came to use as a medium of exchange and a payment option. But, scalability was a problem, which made it almost impossible for Bitcoin to use as payment option. The reason is that it takes long for a transaction to get confirmed. in order to make it clearer, Visa network can process around 24000 transactions per second. On the other hand, Bitcoin can only process 7 transactions per second. As a result, developers stated to look for a solution for this problem.

In fact, Satoshi Nakamoto designed Bitcoin in a way that the size of each block is limited to 1MB. He did it in order to make Bitcoin immune against spammers. As we mentioned, Bitcoin can process only 7 transactions per second. As a result, when the network become busy with many transactions, it becomes too slow and the transaction fees increase significantly as well.

Bitcoin Scalability Issue; Solution

One of the simple solutions to this issue is to increase the block size. But, it’s not as easy as it seems. The developers were suggesting different block sizes. Some suggested 2MB, some 8 MB and some 32 MB. The developer team believed that increasing the block size will make the decentralization protocol inefficient. In this case, only big miners could verify transactions. As a result, it increases the mining costs and small miners will force to leave the network as well.

In addition, it could make more challenges for the network. For example, should all the users update their software? or what would happen if some of them do not update their software?

Finally, the developers agreed that Bitcoin is what it is. Why do we need to change it? If there are users, who don’t like Bitcoin, they can easily use other coins or create their own.

In fact, nobody knows who is the real Satoshi to ask him about this issue and its solutions. Perhaps he also doesn’t mind about the issue and think that Bitcoin is what it is as well.

A better concept and solution

In 2015, Pieter Wiulle presented a solution, which seems like a good idea. The idea was to increase the blocks capacity without increasing the bloc size. In fact, the concept was about how to store data in a block. This concept implemented in 2017 through a soft fork. However, it could perform well, it didn’t get popular among users. Many wallets and exchanges adopted with the new version after soft work, but some others they did not take any action due to high costs. In addition, they were thinking it’s risky to update to the new version.

Many believed that Wiulle idea will not be a good solution in long term. In fact, they think it can solve the problem for a short period of time. As a result, the community came with a new concept in 2017 in New York. The idea was a combination of Wiullie concept and increasing the block size to 2 MB. Many famous exchanges and wallets accepted the new version. As a result, the speed of transactions increased 8 times.

Opposition to the scalability issue solutions

However, the above concepts could be solution to scalability problem, many were not agreeing to implement them. In fact, implementing those concepts on the old and new version of the software caused a problem called “double spending”. As a result, those projects never implemented officially on Bitcoin network.

After that many other solutions suggested to solve the scalability issue. Some tried to fix the problem by increasing the bloc size with new methods. Some even suggested to make changes on how the digitall signatures will store on the blockchain. On the other hand, some suggested the Lightning Network in order to perform micro-transactions on it.

Since Bitcoin introduced as a modern payment option and later on it accepted as a form of investment, it’s network is congested with transaction requests. As a result, its necessary to find a solution to this problem. Because, the scalability issue increased the transaction fees significantly.

However, blockchain technology and cryptocurrencies are quite new. As a result, it takes time to develop them in order to tap on their full potential. However, this process in continuing constantly.

Written by Wallebi Author
Author and analyst in the field of cryptocurrency Profile

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