Practical Ways to Scale Bitcoin

Bitcoin scalability also refers to transaction speed. Therefore, scalability determines the network's capacity, including the number of nodes on the system, the number of transactions the network can process, and how fast the Bitcoin network can process transactions. Currently, this digital money uses blockchain technology to process transactions, whereby blockchain processes only seven to ten transactions per second. The transaction speed is relatively slow with the massive population of people using this digital asset. On the other hand, Ethereum can handle close to twenty transactions per second which are pretty fast compared to this digital money. Additionally, several crypto exchanges have emerged to help people purchase and sell Bitcoin, one reliable exchange is biticodes.

The scaling of this digital money can happen in two main ways. One, stakeholders can upgrade the blockchain network to enable a relatively massive amount of transactions. Secondly, they can create more networks, popularly known as layers, to allow the transfer of this digital money without the use of blockchain.

Scaling the Blockchain

Miners produce new crypto blocks every ten minutes, and each block can contain a limited number of transactions. Bitcoin blockchain processes seven to ten transactions per second. And the blockchain records all transaction data for this virtual currency since its creation.

However, the limit size on each block has changed. In 2010, Satoshi Nakamoto, this virtual money creator, established a protocol stipulating that no block could exceed 1 MB in size. Nevertheless, in 2017, the 1MB limit was altered by the theSegWit upgrade, which raised the limit to 4 MB. But many virtual money blocks do not hit the 4MB limit but only remain at a 1.3 MB size.

This virtual asset network set these established limits of 1MB and 1.3MB to prevent the size of the blockchain from growing too much so they will not change later on. As a result, efforts on this electronic money blockchain network focus on reducing the data required to complete this virtual money transaction. The Taproot upgrade is excellent because it ensures that transactions take less space in a Bitcoin block.

Layered Scaling

Efficient improvements to the blockchain network are significant to ensure that billions of digital money users access the Bitcoin network. Therefore, additional methods, known as layers, also facilitate the transfer of this virtual set without the blockchain.

In other words, a layer is a network aside from the Bitcoin blockchain that allows users to use this virtual money. In the end, layers allow Bitcoin blockchain transactions to settle or represent large numbers of payments in packages.

What's more, layers connect with the blockchain. However, they do not broadcast every transaction to the blockchain. As a result, layers enable more immediate settlement and save on transaction fees.

The Lightning Network

The Lightning network runs on top of blockchain technology, enabling faster and less costly transactions. A single virtual money transaction takes close to twenty or forty minutes. On the other hand, the Lightning network executed transactions virtually at a fraction of the cost in its network of payment channels. In other words, the lightning network enables instant, fast, and less costly transactions.

Final Thoughts

Generally, blockchain has a scalability problem, which limits its use as an exchange medium. However, creating new layers is a good upgrade because, in the future, these layers will make spending this virtual money faster, cheaper, and more manageable. As a result, this virtual money's users will not pay high transaction fees to transact this digital money using blockchain.