The average speed of bitcoin is approximately 4.6 transactions per section. Visa, in comparison, is able to process 1,700 transactions per second. To anybody, these numbers seem quite disappointing. To resolve the scalability issue, it is important to identify some of the potential underlying causes.
According to an article by U Today, there are a number of issues. First, there is limitations – new transactions cause a net increase in the size of the blockchain. Second, there is data size. There is a 1MB hard-cap on the bitcoin blockchain. Third, there is response time. It takes ten minutes on average to extract one block on the bitcoin blockchain and online transactions must be validated. Fourth, there are high fees because mining requires higher processing power.
Then there are the solutions. Due to the structure of the blockchain, the community must support each decision that is made. As a result, it may take time and effort to implement any solutions.
One of the first potential solutions is a hard fork. A particularly successful example of a past hard fork is Bitcoin Cash. The altcoin breaks a block size mark of 32 MB. Perhaps a hard fork of the bitcoin blockchain may promote similar results.
A second potential solution is a soft fork, which will enable the storage of a witness signature. This promotes free space in a block and also, it increases the block size. SegWit is an implemented protocol that may be able to achieve this goal. The technology may be able to optimize payment verification, reduce soft fork fees, eliminate the issues associated with Bitcoin transaction malleability, and it could increase the block size by permitting signature data on transactions in each block.
SegWit has its drawbacks as well. There could be issues concerning system operations because wallets must conduct operations on their own, there will be fewer fees generated from mining, and perhaps most significantly, such radical actions could cause the community to separate.
The Lightening Network may also be able to solve blockchain’s scalability issue. The network does not record all transactions on the blockchain because that is what cause the system to overload. Rather, it is sufficient to open the payment channel and to record the data that an opening has occurred. The channel will remain open until there is a decision to close it and the relevant data is added. There are a number of advantages associated with the lightning network solution. For example, it reduces bitcoin blockchain load, it can increase transactions per second, it could reduce verification ques, and it may minimize miners’ fees for servicing transactions.
The disadvantages are security concerns, the P2P nature of the protocol, a probability of network centralization, and the network is still in its experimental stage.
Overall, the bitcoin blockchain scalability issue is becoming more challenging as the bitcoin and cryptocurrency community grows. By looking at the methods that can resolve the scalability problems, users may be able to find a solution.