July 19, 2017
The issue of bitcoin scalability has been a persistent one, and the subject of heated debate, for some time. While bitcoin’s price soared to new heights and users multiplied, the question loomed: How can it be scaled?
Let’s look at the basics. Bitcoin uses blockchain technology. A blockchain is essentially a distributed database for an ongoing chain of transactions or “blocks”. Each block is linked to a previous block. In the case of Bitcoin, the blocks consist of data on the Bitcoin network. Once verified, a block cannot be altered. This gives us a revolutionary system for securely recording and tracking digital transactions.
The Bitcoin scalability problem concerns the size of the blocks. Under the Bitcoin Core system, blocks were limited to 1MB of storage capacity. With the growth in bitcoin usage, the chain started to get congested. Like cars in a traffic jam, Bitcoin transactions were slowing down.
Clearly the block size needed an update. But miners, developers and others disagreed on how to solve the problem. Most fell into one of two camps: Segregated Witness (SegWit) or Bitcoin Unlimited. SegWit would speed up transactions by adding a piece of code to each new block. However, it required 95% support from Bitcoin miners. There was resistance.
After the CoinDesk Consensus 2017 conference in May, the Digital Currency Group published a post called “Bitcoin Scaling Agreement at Consensus 2017”. It said that a group of Bitcoin companies and miners had agreed to “SegWit2x”. This plan would both implement SegWit, and allow more transactions per block. Later a new bitcoin improvement proposal, BIP91, was introduced as a safer, faster way to implement SegWit. For example, it requires 80% miner support, rather than 95%.
Today BIP91 reached the required 80%. If this level of support continues, BIP91 could well be locked in. As of this writing, the Bitcoin community is keeping a close watch. If one big mining pool stops signalling BIP91, support could dip below 80%.
Most agree that the BIP91 solution is in everyone’s best interest. As a Steem user wrote, “cryptocurrencies are experiencing a fast-paced appreciation, following the downward trend previously experienced. Given the less-intrusive nature of BIP91…[Bitcoin] traders and investors may feel more confident with their cryptocurrency holdings, a factor that is certainly fuelling the current rally.”