Scalability has been an ongoing discussion that really began escalating in 2013. “Discussion” is a misnomer, it’s been more of a “contentious debate.” Whether it’s “OG” Bitcoiners held up in hotel rooms, a panel at your favorite crypto conference, or Crypto Twitter this issue always comes up.
In late 2010, Satoshi implemented a 1 MB limit on the block size to prevent Bitcoin miners from producing bigger blocks than other miners were willing to accept; the intention was to avoid chain splits which occur from difficulty reaching fast consensus in a distributed system.
Why would miners and full nodes not be willing to accept bigger blocks? Many don’t have sufficient hardware nor bandwidth capabilities to propagate big blocks with larger amounts of data. Also keep in mind that in 2010, internet infrastructure wasn’t as robust, so propagating bigger blocks was far less reliable and feasible than smaller ones. But this left Bitcoin only capable of facilitating roughly 5 transactions per second.
So if increasing the artificial 1 MB limit is as easy as changing one line of code, why can’t we just do that? Simply put, there are tradeoffs to everything. Many community members had varying perspectives on how to best scale Bitcoin – the main argument boiled down to how to minimize tradeoffs of decentralization for higher throughput. Conflicting viewpoints drove the community apart which is why we now have Bitcoin, Bitcoin Cash, and Bitcoin SV.
It has also opened the door for other competing protocols and various scalability projects to capitalize on Bitcoin’s limitations. Just look at the ICO craze of 2017 and the vast “smart contract” protocols that have been created. The reason scalability is so important is that, without it, these applications are neither fast, cheap, nor easy-to-use.
The main scalability challenges come down to networking, storage, and computational power. Networking is the biggest bottleneck. If you want to propagate a block full of data around the world, you might send it to a few computers, then those computers send it to a few computers, and so on until the whole network is aware of it. This takes a good amount of time, which is why Ethereum and Bitcoin have a relatively high amount of time between blocks. If you can figure out how to decrease propagation times and reduce the time it takes to send a block around the network, you can increase throughput and speed. If you had a computer 10x more powerful than the one you have today, without fixing the network propagation issue, you would not see a meaningful increase in throughput due to bandwidth still being the limiting factor.
Now, it’s easy to look at Bitcoin and say, “Things have only scaled a small amount in a decade – this will never scale!” I think this is shortsighted for a few reasons. One being that Bitcoin is primarily used for transferring value, and there are better solutions for scaling that (think Lightning network). In addition, scaling smart contract platforms with utilities beyond payments has only been in development for four years.
Ethereum, for example, has only been around four years, and while the first few were spent making lots of developer user experience (UX) improvements, bug fixes, etc., the next three will be spent scaling the technology. Also, until recently there were no substantial applications or projects on top of Ethereum that were live. From a practical standpoint, now that there are real-world applications, people working on scalability can look at those use cases to see how they should solve scaling problems.
Scaling Bitcoin will be solved just as scaling the internet was solved. Personally I think the key solution will help give Bitcoin it’s “AOL” or “Broadband” moment boosting the network dependence and usage to new all-time highs.
Onwards & upwards!
Bly 🏁
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⚠️Infographic⚠️
📜Random Interesting History 📜
November 20, 1985
Today in 1985, the Windows 1.0 operating system launched. It was a 16-bit graphical interface over MS-DOS, which was based on a command-line interface, that is, the user typed in individual commands. Windows relied on using a mouse when that was still a novel method of using a computer, and even included a game, called Reversi, to help people get used to using a mouse to interact with a computer. The Windows operating system is currently on its 9th iteration, called Windows 10.
😮Yes that did happen😮
🔥Tweets of the Day🔥
Gotta love talented kids…
📰What happening; News that Matters📰
Grayscale Files Paperwork With SEC for Grayscale Bitcoin Trust
New York Department of Financial Services Issues License to Fidelity to Operate Virtual Currency Custody, Execution Platform
Lamborghini Integrates Salesforce Blockchain to Authenticate and Certify Heritage Cars
FEMA Recommends Blockchain-Based Registry for Disaster Insurance Payouts in Report to Administrator
Visa Research Releases Paper on Blockchain-Based System for Policy-Compliant Computing
Bakkt to Offer cash-settled Bitcoin Futures in Singapore Through ICE Clear Singapore
Federal Reserve Chairman Jerome Powell Says Federal Reserve Studying Potential Benefits of Government-Issued Digital Currency
🏁Final Thought🏁
Nature is great.
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