Bitcoin’s Scalability Issues
Bitcoin is believed to be the future of the financial system. But like every other network, there stand some issues in the Bitcoin system that hinders its development as well as circulation.
Scalability issues in the Bitcoin Network stand for the number of transactions it can process per second. Bitcoin’s Transactions happens over the Bitcoin blockchain. The blocks are limited in frequency and size, i.e. 1 megabyte in size. While a block is only created every 10 mins, which means that there can only be 1 megabyte worth of transactions for every 10 mins. While other networks like Paypal does 193 transactions per second and visa which do 1667 transactions per second, Bitcoin only manages up to a maximum of just 7 transactions per second. The more unconfirmed transactions that are piled up in the blockchain, the more transaction fee the users have to pay as a charge. Thus making it time-taking and less convenient.
Scalability Issues Solutions
Several solutions to scale Bitcoin’s system correctly have been proposed. Some of these are:
- Bitcoin XT: The idea of Bitcoin XT was to increase the limit of block size to 8MB so as to increase the number of transactions taking place in the blockchain.
- Segwit2x: Segwit stands for segregated witness and is a way of separating signature data to save space in the block. The input data script in every transaction contains a public key and a signature which proves that the transaction is spendable. The segwit is used to take out this data and scrape it out of 1 MB block and move it to an extended block.
- Schronnr signature: Every successful transaction requires a signature, which takes up spaces in the BTC’s blockchain. If there are multiple transactions with the same dealer, then there will be the need to create multiple signatures for just one dealer thus taking unnecessary space. Schnorr signature helps to carry out multiple transactions with one dealer by eliminating the need to create multiple signatures reducing the load.
- The “Honk Kong Agreement”: The Honk Kong Agreement was signed by a community of miners and developers that had a routine time-table for both the activation of Segwit proposal and increasing block size by 2 MB.
Problems to solutions- Increasing Block size is not a good idea as it will cause rise in the size of blockchain which already is enormous, if its size goes up then it will have fewer nodes and which can threaten its existence, so a viable solution is still in the air.
It is clear that Scaling issue is still the biggest problem in the Bitcoin network. However, it may be solved by the various proposed solutions or a future one. It is doubted that one solution can eradicate the issue but however the combination of the given approaches may help in the resolution of Bitcoin issues in the future.