The cryptocurrency sector has undergone a seismic shift in recent years as retail investors and publicly listed companies make their way into the space.
Globally, estimates show that between 2018 and 2020 the number of crypto users has increased by around 190%.
The record-breaking influx in the market has led to the number of active addresses on the bitcoin network, as well as trading volume to this year’s high.
From above, all this should be the reason for the celebration – and it is. But here’s the problem: While the network of bitcoins is enjoying an increase in demand, it can be argued that the infrastructure of the blockchain is not building.
Bitcoin’s 1 MB block size means that this blockchain can only handle about five transactions per second on average. Extrapolate it for a period of 24 hours, and you are looking at about 86,400 transactions. Despite the immense achievements of this network, it makes it mathematically impossible for the blockchain to promote global payments in its current form.
All this has led to an increase in BTC transaction fees – And according to some estimates last month, They managed to break the $ 62 record set back in December 2017. A dramatic drop in the network’s hash rate, linked to a power shortage at Xinjiang’s Chinese mining center, was blamed. The results are obvious, as it means that the blockchain becomes too expensive for many of us to use… especially for small transactions.
Solutions have been put forward, the most notable of which is the Lightning Network. But as Cointegraph has pointed out, Adoption has been slow In the three years since launch, some users have opted to bear expensive on-chain transactions due to the technical requirements associated with this L2 option.
Back in February, research suggested that 88% of bitcoin transactions were also input Finish Paying Excessive Fees Because they fail to use the SegWit format, which helps increase capacity. In the past, estimates have indicated that full adoption of SegWit may result in block sizes of up to 2MB. We are far from achieving it – the latest data from TransactionFee.info Shows That only 70% of transactions use SegWit, resulting in a block size of 1.3MB.
Meditation moves away from the chain
Of course, this is not just an issue that is specific to bitcoin. Ethereum has had its fair share of scalability concerns in recent months – due to the current bull market, the rise of the DEFI protocol and the explosion in NXT.
All these have led to a solid push towards layer-two solutions such as rollups: smart contract networks that process and store transaction data away from the main blockchain. Vitalik Butyrin believes the rollup will serve as a sticking plaster that will help the Ethereum network manage current levels of congestion – along with reform proposals that will also change the way gas tariffs are calculated.
But there are concerns that even the introduction of Eth2 May not be enough To ensure that this network is futureproof. As Chief Operations Officer of Matic Operations Sandeep Nelwal told Coinclague: “Eth2 does not provide infinite scalability to Ethereum. The best case scenario is with 64 sharks that may be similar to today’s Ethereum series. Suppose PoS The single chain improves with and has 50 TPS. Still 64 Sharp can offer 3,200 TPS. As soon as the supply of this TPS hits, DAP will start using the chain even faster and demand will pick up. Will rise again. We will be in the same position again. “
what’s the answer?
Some experts in the blockchain industry believe that the only solution to end the crisis of scalability is to create a network that can handle large amounts of transactions with offsets.
Ilcoin Initially started as an alternative to bitcoin but now it has evolved to become its own unique blockchain network. The project shares the same premise as Bitcoin SV, Bitcoin Cash and Bitcoin: SHA-256.
In March 2021, blockchain service provider TAAL claimed to have succeeded in processing 638MB of blocks on the Bitcoin SV – much more than the current, theoretical limit of 128MB. This is a major improvement over the 1MB block size that is limited to BTC, and is somewhat ahead of BCH’s 32MB block size.
In 2020 5GB of blocks were produced on the ILCoin blockchain for use with the RIFT protocol, which allowed the block size to increase without compromising transaction speed. This can be verified on ILCoin’s block explorer under block number 310280.
Overall, the project states that it can provide real decentralization, while increasing the speed on the Visa network by 10 times.
Financial institutions including Visa and MasterCard as well as mainstream banks are paying more attention to what blockchain technology is capable of – ILCOIN says that it provides unique infrastructure that allows for the next generation of payments is applicable.
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