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How to Solve the Bitcoin Scaling Problem

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Many users have raised concerns about the Bitcoin network’s scalability. Here are some remedies to the Bitcoin scaling problem. 

Bitcoin had just a handful of users on its network in the early days, and the number of transactions processed was relatively low. However, scaling issues started as the network expanded, attracting significant numbers of transactions, users, and miners. On the other hand, if you are about to start trading bitcoin, you may use a hassle-free platform like Bitcoin Motion to avoid problems in your trading transactions.

The Bitcoin blockchain can currently process just about 7 to 10 transactions per second. That is insufficient to host all transactions in a world of more than 8 billion people. Early Bitcoin adopters were the first to identify the potential scaling problem, and many have raised suggestions on how to address it. So, how can Bitcoin solve the scalability issue?

Scaling Bitcoin 

Bitcoin serves as a digital token and a distributed network. The tokens are exchanged between users while the network processes and tracks the history of those transactions using a blockchain ledger. However, users can transfer Bitcoin outside the blockchain via other protocols and networks. That allows Bitcoin to scale and host the enormous payment threshold required to become a dominant global means of payment. 

While many proposals have come up on how to solve Bitcoin’s scalability problem, two ways currently seem as the most viable and efficient. The first method is by upgrading the blockchain to handle more transaction volumes. Innovators can also create additional networks, known as layers, to allow the transfer of Bitcoin directly without using the blockchain. 

Bitcoin’s blockchain can only process 7 – 10 transactions per second because block creation takes an average of 10 minutes. Besides, every block has a specific limit of transactions it can hold. The duration of creating new Bitcoin blocks was established during Bitcoin’s development and is not likely to change. 

However, the size of blocks has changed many times. Satoshi Nakamoto established a rule that blocks should not exceed 1MB in 2010. Although the SegWit upgrade introduced in 2017 raised the block size to 4MB, most Bitcoin blocks remain limited to about 1.3 MB. 

The Bitcoin network sets those limits to prevent the size of the blockchain from growing too rapidly. Thus, they are not likely to change in the future. That leaves most efforts towards scaling the Bitcoin network focused on reducing the data required in transactions. For instance, the Taproot upgrade offers more efficient transactions that take up less space in Bitcoin blocks. 

Bitcoin Layers 

Layers are alternative networks to Bitcoin’s blockchain that allow users to transfer Bitcoin. They allow Bitcoin blockchain transactions to represent or settle larger payment volumes in batches. Although layers connect to the blockchain, they do not broadcast every transaction to the network. That saves on fees and facilitates more rapid payment settlements. 

The Lightning Network 

The Lightning Network (LN) is the most prominent layer on Bitcoin’s blockchain. It enables micropayments and smaller daily transactions that are no longer economic on Bitcoin’s network. It facilitates instantaneous and no-cost or almost free Bitcoin transfers between parties. Users open and close lighting channels using regular Bitcoin transactions and the blockchain. Once a party opens a track, it can execute an infinite number of Lightning transactions. 

The Liquid Network 

The Liquid Network’s blockchain is similar to that of Bitcoin but is not entirely decentralized as a group of entities govern it. The Liquid Network can guarantee prompt payments and low fees at the expense of decentralization. 

While many other alternatives may still exist for addressing the Bitcoin scaling problem, layers are undoubtedly the most efficient and resilient remedy. Layers will make it easier, faster, and cheaper to spend Bitcoin. Further improvements to the Bitcoin protocol and innovative layers on top of Bitcoin’s blockchain will enable the network to handle billions of micropayments and international transactions daily.