Find out about the scaling issue and why Bitcoin urgently needs to scale here.
SegWit seems to only have a 12% adoption rate at the moment. This mainly seems to be due to the fact that the Bitcoin Core team has not properly implemented wallet support into the system. We currently expect this to be implemented by 1 May 2018, which should make it far easier for exchanges and desktop and mobile wallet developers to apply SegWit to their respective platforms. Once SegWit is applied to more and more wallets we should have more miners adopting SegWit and eventually reducing fees for the masses as opposed to the few who currently use SegWit.
The Lightning Network is another system built on top of Bitcoin that would let people instantaneously send/receive payments and reduce transaction fees by keeping them off the main network. Lightning was first proposed in January 201 and was implemented late last year. That being said, it was only last week that a lightning network store was implemented on the Bitcoin MAINNET.
Over the past few days, we have seen nodes on the Lightning Network on the Bitcoin TESTNET increase to over 1000 nodes with over 3400 channels. These nodes are spread across 6 continents with the majority of them in North America and Europe.
The MAINNET has also seen lightning nodes being slowly added. Last week we saw Blockstream unveil lightning charge as well as a lightning-only store on the MAINNET, and as of this morning, there were 104 nodes with 232 channels active.
Both of these ideas stemmed from identifying the same problem. The problem that Bitcoin is facing is that as more transactions are being conducted, more blocks have to be added to the chain. Blocks are generated every 10 minutes and are constrained to a maximum size of 1mb. Due to this constraint, only a certain number of transactions can be added to a block. As a result, some people (and wallets) opt to pay more to essentially prioritise their transaction. This caused transaction fees to rocket up to $30 in December, essentially making it useless as an everyday currency.
it would appear that these two solutions are perhaps beginning to bear fruit. Since 20 January the amount of unconfirmed transactions has been steadily decreasing, allowing miners to confirm transactions with lower satoshi/byte offers.
Some analysts and speculators are reporting that 30-50 satoshis (0.00000030-0.00000050 BTC) per byte are now being processed in new blocks. and the data on Johoe’s Bitcoin Mempool seems to suggest the same.
This, however, is not factoring in confirmed transactions. As is seen in the listing by earn.com which is used by many exchanges and wallets like Exodus a 30-50 satoshi transaction could take from 3 to 89 blocks to be confirmed, which translates to 25 to 780 minutes (13 hours) to be confirmed.
a 40 satoshi/byte transaction would cost you approximately 9040 satoshis, (0.00009040 BTC) and the fastest and cheapest fee per byte is 280 (0.00000280 BTC) Satoshis based on current transactional data, costing you approximately 0.0006328 BTC or $6.80. While this is a great reduction from $30 per transaction, Bitcoin has still not scaled to be a practical currency for all transaction types. A $6.80 fee isn’t too bad if you’re buying a car, but it’s pretty steep if you’re buying a magazine or a soda.
It would appear however that SegWit and Lightning Network are steps in the right direction and I will be waiting and watching eagerly to see if the Bitcoin Core team release a SegWit implementation in May, as well as whether more companies come on board with Lightning Network and Lightning Charge, which is fast gaining new nodes and channels.
With this information to hand, I now feel confident that Bitcoin is able to scale and will do so as more support for both SegWit and Lightning develops, which is great news for every cryptocurrency investor whether they have a position in Bitcoin or not.
If you have any questions or comments, feel free to contact me on Twitter: @CryptTee
Tiaan Wolmarans is a cryptocurrency investor and trader, airplane pilot, musician, and writer.
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