Bitcoin’s scaling difficulties spark controversy among its community

May 25, 2023 Zeeshan

Bitcoin’s popularity surged rapidly after its release, which may not have been expected at first. But since Bitcoin is a new technological advancement with no solid background, scalability issues soon hindered the blockchain’s productivity rates. Considering the increasing number of transactions on the network, Bitcoin couldn’t handle large amounts of data anymore since the blocks have limited features. This can be attributed to the PoW consensus mechanism used, which isn’t efficient anymore.

If you want to buy Bitcoin and further invest, you must be prepared to face capacity limitations that increase the time in which the transaction is processed. Unfortunately, Bitcoin doesn’t operate that fast anymore, considering the number of users on the network and increasing demand.

With so many investors making daily transactions, Bitcoin’s community has started to make waves considering that transfer fees are continuously surging. In contrast, the unconfirmed transactions on the mempool are barely completed on time.

What do users think of Bitcoin’s current situation?

Two days ago, a surge in on-chain activity occurred, and the mempool was overflowed with over 4000,000 transactions. However, it took about 24 hours to mine around 200 blocks, which led people on the blockchain to suspect the higher fees and increased network activity to be the cause of scalability issues. Others believe the blockchain experiences a silent attack scheme.

Current issues with Bitcoin make it more difficult for new users to onboard and use on-chain features or open channels. While some experts believe this is caused by other users trying to break Bitcoin, others state that the high fees are part of the adoption process.

Meanwhile, as people discuss the matter, Bitcoin developers are looking for a suitable option to minimize scalability concerns. One way of mitigating this would be to introduce some sort of censorship at the node level, which would be easier to implement and control.

Why transaction verification and volume are a problem to scalability

Verifying transactions is done through mining, where miners collect transactions from blocks and solve complex cryptographic puzzles. It is estimated that the block time is estimated to be around ten minutes, meaning this is how much it takes to mine a block. Although this technique was efficient when Bitcoin was released, now it can’t handle all the transactions on the blockchain.

The transaction volume is also increasing on a yearly basis. However, the transactions processed on the network are still limited, as Ethereum, the second most known cryptocurrency, can process around double the transactions, while Ripple has a capacity of 1,500 TPS.

Are Bitcoin Layers efficient?

Like Ethereum, Bitcoin also has layers that help the network remain productive. These two options allow Bitcoin to validate larger payment volumes in batches so that the ecosystem provides more rapid payment settlement. One of these is the Lighting Network, which helps enable micropayment and other smaller transactions that no longer effectively boost the blockchain’s operations. At the same time, LN facilitates rapid and affordable transfers between parties by simply opening a lighting channel that can execute infinite transactions. The Liquid

Network also provides low fees and fast payments through decentralization. Together, these Bitcoin solutions make it easier for Bitcoin to be used by multiple users. However, they might have lost adaptability in recent years when the network got full of investors and developers.

Bitcoin also implemented the Segregated Witness, the update dividing data outside the space provided for each block on the network. The system aims to address the issue of experiencing a slowdown due to the increasing number of transactions processed.

Modular blockchains, an alternative solution

Since blockchain technology may have become less efficient, newer solutions are being developed. For example, modular blockchains divide components like the consensus mechanism, smart contracts and data storage into smaller blockchains that can be combined and customized later.

Modular blockchains can help allocate resources efficiently and reduce the energy required to run a blockchain while providing greater scalability features. An example of such an innovation is Celestia, the first modular blockchain network.

Bitcoin vs Ethereum scalability ―who’s handling it better?

In terms of scalability, both Bitcoin and Ethereum face challenges, and that’s because the two blockchain technologies merged at a time when cryptocurrencies weren’t that popular and gained usage overnight. Although they provide many benefits, other centralized payment solutions, such as Visa, can handle around 20,000 transactions per second, far from the seven Bitcoin TPS.

On the other hand, Ethereum implemented multiple updates through the years to make the network faster and more efficient. The primary method of reducing network congestion is sharding which can increase the TPS power by creating shards. At the same time, Ethereum developed layer-two scaling solutions called side chains that use different consensus mechanisms to process transactions and lower transaction fees. However, considering they’re separate blockchains from Ethereum’s ecosystem, they might not benefit from the same security features.

What are the most scalable blockchains?

In terms of scalability, many blockchains are better than Bitcoin, such as the following:

Ethereum 2.0, the upgraded version of the Ethereum blockchain, is also known as Serenity and can expand its processing capacity and decrease latency;
Solana is Ethereum’s most significant competitor through its PoH consensus mechanism. Solana uses parallel processing, reaching up to 65,000 TPS;
Avalanche is a DeFi platform that improves transaction speed and efficiency through its multi-chain feature that allows for streamlining developed blockchains;
Cardano uses Ouroboros as a consensus mechanism to increase scalability, security and sustainability while validating blocks with less energy required;
Algorand validates blocks pretty impressively through its PPoS consensus mechanism through which blocks are randomly selected to enhance security;
Polkadot is a multi-chain protocol that supports interoperability between blockchains with the NPoS consensus mechanism that create multiple parallel chains;

Final thoughts

The first cryptocurrency ever created, Bitcoin faces backlash after users spotted scalability issues. Considering it got so popular recently, developers should’ve expected that the increasing number of users would make the network less efficient, which is why Bitcoin is now trying diverse methods to boost operability with fast transactions. Still, fees have increased enormously, making it difficult for newbies to enter the ecosystem.