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The bitcoin scalability problem refers to the discussion concerning the limits on the amount of transactions the bitcoin network can process. It is related to the fact that records known as blocks in the bitcoin blockchain are limited in size and frequency. These jointly constrain the network's throughput. The transaction processing capacity maximum is estimated between 3. Business Insider in characterized this debate as an "ideological battle over bitcoin's future.
The block size limit has created a bottleneck in bitcoin, resulting in increasing transaction fees and delayed processing of transactions that cannot be fit into a block. Increasing the network's transaction processing limit requires making changes to the technical workings of bitcoin, in a process known as a fork. Forks can be grouped into two types:. A hard fork is a rule change such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid.
In case of a hard fork, all nodes meant to work in accordance with the new rules need to upgrade their software. If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur.
For example, Ethereum has hard-forked to "make whole" the investors in The DAO , which had been hacked by exploiting a vulnerability in its code. In the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange.
The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment. Alternatively, to prevent a permanent split, a majority of nodes using the new software may return to the old rules, as was the case of bitcoin split on 12 March Bitcoin Cash is a hard fork of bitcoin increasing the maximum block size. Bitcoin XT , Bitcoin Classic and Bitcoin Unlimited all supported an increase to the maximum block size through a hard fork.
In contrast to a hard fork, a soft fork is a change of rules that creates blocks recognized as valid by the old software, i. A user activated soft fork UASF is a contentious concept of enforcing a soft fork rule change without the majority support of miners.
Segregated Witness is an example of a soft fork. Technical optimizations may decrease the amount of computing resources required to receive, process and record bitcoin transactions, allowing increased throughput without placing extra demand on the bitcoin network. These modifications can be to either the network, in which case a fork is required, or to individual node software such as Bitcoin Core. Protocols such as the Lightning Network and Tumblebit have been proposed which operate on top of the bitcoin network as a cache to allow payments to be effected that are not immediately put on the blockchain.
Transaction throughput is limited practically by a parameter known as the block size limit. Various increases to this limit, and proposals to remove it completely, have been proposed over bitcoin's history. From Wikipedia, the free encyclopedia. For a broader coverage related to this topic, see Bitcoin. Part of this section is transcluded from Fork blockchain.
User activated soft fork. Retrieved 18 January Retrieved December 10, The maximum throughput is the maximum rate at which the blockchain can confirm transactions. This number is constrained by the maximum block size and the inter-block time. Retrieved 2 July Retrieved 17 January Retrieved 1 July Retrieved 13 November Archived from the original on Retrieved 4 Jan Retrieved 13 March Retrieved 21 January Retrieved 4 July This is What to Expect".
Retrieved 24 August Retrieved 20 August Retrieved 22 June Retrieved 29 June Retrieved 6 October Retrieved 8 November The Bitcoin Unlimited Debate".
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