Between Scalability and Centralization of Bitcoin
Many cryptocurrency market participants and Bitcoin enthusiasts are looking forward to wide usage of Bitcoin as currency. However, scalability is among the greatest challenges hindering the achievement.
Bitcoin’s proof of work consensus algorithm is exceedingly essential based on immutability viewpoint; however, it has not been able to do as expected regarding transaction speeds when in competition with other forms of payments. People argue that Bitcoin is suitable as a store of value asset and not as a medium of exchange.
In recent times, Bram Cohen of the Chia Network featured in an episode of the Untold Stories podcast. He discussed Bitcoin’s scalability issues, the necessary tradeoffs and the function of transaction fees within Bitcoin domain. According to him, on-chain scaling has to do with making the blockchain bigger.
Cohen mentioned the similarity between Bitcoin and Ethereum. He noted that Ethereum offers support for about double of Bitcoin’s transaction rate and it now seems to be falling over and only a few full nodes are running. There are still some tradeoffs made in the Ethereum network, he said.
Regarding the function of transaction fees across Bitcoin network and its possibility of having a favorable effect on the transactions being processed, Cohen said for full blocks, Bitcoin core devs think fees should increase, more fees should be incurred by those who are interested in quicker transactions, and less fees should be incurred by those who are interested in waiting for a while.
According to Glassnode, transactions per second for Bitcoin dipped steadily last year. Also, when compared with Bitcoin Cash, at the moment, it is 130 times more expensive to transact on Bitcoin. With these, Bitcoin’s scalability is put to test and makes the likelihood of Bitcoin becoming a medium of exchange ahead questionable.