How will the Bitcoin network accommodate more users?
In the early days of Bitcoin, there were not many users. Thus, there were not many transactions. Because of this, it was very cheap to send transactions on the Bitcoin network. They were also very fast.
Over time however, Bitcoin became much more popular, which today supports many dozens of exchanges, as well as retail merchants and peer-to-peer transactions.
At present, there are more than 100 transactions per minute that are being broadcast on the Bitcoin network. The average transaction cost is more than $1. Because of this increased popularity, there have emerged a number of proposals on how to “scale”. That is, to grow Bitcoin’s capacity for transactions.
For most of Bitcoin’s modern history, the maximum size of each block in the blockchain was 1MB.
Warring camps create two Bitcoins
In August of 2017, a patch was introduced into the core Bitcoin client, which began rejecting blocks produced by miners who did not support the new SegWit version of Bitcoin.
As a result of this patch, a minority group decided to create a new version of Bitcoin called Bitcoin Cash. This immediately increased the size of Bitcoin blocks from 1 megabyte to 8 megabytes.
Although many in the Bitcoin community felt that this version of Bitcoin would fail, Bitcoin Cash has actually gone on to stand on its own two feet.
It has the support of several Bitcoin personalities, including Roger Ver and Craig Wright, who once claimed to be Satoshi Nakamoto.
The Lightning Network is a scaling solution that settles transactions outside of the Bitcoin blockchain and therefore allows for instant transactions. For companies that generate a lot of transactions like Stake, Lightning makes it possible to send more transactions for lower fees than ever before.
Segregated Witness or “SegWit” is a technology created by famed Bitcoin developer Peter Wiulle. This enables more transactions to fit into less space by rearranging the way that information about transactions is stored. Its implementation came with a small block size increase to about 1.8 megabytes per block.
Bitcoin’s popularity has only been increasing over the past few years, and demand for Bitcoin block space will increase right along with it.
At the present time, it is still sensible and feasible for an average user to run a full node. Eventually the blockchain will be so large that more and more people will move to lightweight wallets. Especially given that the Bitcoin blockchain already consumes more than 170 gigabytes on a hard drive.
It is believed that Lightning Network and SegWit will be enough to accommodate future network growth. But other scaling solutions are sure to come along and further improve the capability of the Bitcoin network.