Have you got bitcoins in your pocket? Having bitcoin is not enough; you also need to know about the scalability option of bitcoins. In this world full of numerous currencies and cards, how scalable are bitcoins? In this article, we will discuss the scalability of bitcoins.
How competitive are bitcoins?
The competitiveness aspect of bitcoin has been in the debate in the crypto community for a long duration now. Satoshi Nakamoto has programmed the block of size up to 1MB to prevent the network spam, but he also created bitcoin liquidity.
Each bitcoin block takes up to an average of 10 minutes to process, and only a small proportion of transactions can go through. For a system that claims to replace fiat payment, this is a significant barrier related to bitcoins. Let’s look at this scalability aspect of bitcoins with an example. While the visa payment system can process up to 1700 transactions in a second, bitcoins handles up to 7 trades in a second. Thus, an increase in demand for bitcoins will cost more transaction fees, and therefore, the utility of bitcoins will get affected.
The scalability aspect of bitcoins has led to numerous technological advancements and innovations in this field. Undoubtedly, much design has been made over a decade, but a sustainable solution is still unclear.
A few years back, few researchers claimed that increasing the block size could be a significant solution to solve the scalability option, but the process and the idea were not as simple as it seemed. This innovative approach just remained on paper as it could not be finalized how much the block size could be increased. While some proposals climbed to increase the block size by two MB, others climbed that eight MB could be useful.
The core team who focussed on the development of blocks argued that the increase in block size would weaken the process of decentralization, and it will also give more powers to the bitcoin miners who have more giant blocks. In addition to this, miners would look for bigger and faster machines, which may influence the bitcoins’ profitability aspect.
One of the most significant issues faced by bitcoins was that everyone did not agree with the changes needed. People claimed that how can a system-wide change be made if the participation is decentralized.
In addition to this, few strategists and scholars claimed no need to mess with bitcoins. If you don’t like it, you can easily modify the open-source code, and you can quickly launch your coin.
Pieter Wille developed one of the most significant solutions to this issue, and the process was called SegWit. As per this new process, bitcoins’ capacity could be easily increased without changing the size limit. The SegWit system was initially started by the Bitcoin system in the year 2017 by a soft fork to make it compatible with nodes that could not be upgraded. While different types of bitcoin wallets are adjusting their software, others do not agree to this, as they think about the risk and additional cost associated with it.
In the year 2017, another significant change came up in the field of bitcoin. A new approach was revealed, which was called Segwit 2X. This idea was backed by different bitcoin exchanges. As per the changes, it was decided to increase the block size up to 2 MB. This change was expected to increase the capacity of the transaction up to 8 times.
Over the past few years, different technological advancements have taken place to increase block capacity. One of the most significant advancements associated with bitcoins is the Schnorr signatures. This approach will help in consolidating signature data, and it will also reduce the space taken by bitcoin blocks. Thus, the process would lead to a more significant number of transactions without changing the limit or the size of blocks.
The need for a more significant number of transactions is still the need of the hour. The development of new features will increase the functionality, and it will unlock the vast potential of bitcoins.