Bitcoin’s Scaling Problem

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SegWit2x is the proposed way of dealing with Bitcoin’s increasing scaling problem. If all goes according to plan, the majority of mining pools will implement the software 14th July 2017.

You’ve probably heard of Bitcoin. Even own some yourself if you’re lucky. One of Bitcoin’s biggest challenges is its scaling problem or how to increase its transaction volumes and settlement times.

Currently, Bitcoin manages about 7 transactions per second. Compared to VISA, which handles 2,000 transactions per second or 56,000 at peak capacity. If Bitcoin wants to be compared with real cash, then it must handle even more than VISA considering the cryptocurrency is vulnerable to DoS attacks. The limitation comes down to Bitcoins inherent block size limit of 1MB.

There have been many fiery debates on whether to; or, even how to abate this problem. Since the community is reliant on consensus to create a hard fork, the majority wins. Right now, almost 70% of the mining power, creating the blocks of the block chain and thereby controlling the network is in China. A country, which until very recently didn’t even recognize Bitcoin as a real asset.

The current majority of mining pools seem to have agreed on SegWit2x as a way to scale up Bitcoin’s capacity, though resistance among other pools still exists. SegWit2x aims to double the block size to 2MB and make sure Bitcoin transactions stay fast and secure. The whole cryptocurrency community are watching as the leader of blockchain-based currencies takes on its inherit scaling problem. If all goes well, Bitcoin may remain the market leader for several more years. However, if this leads to a split with multiple forks emerging and with problems coming to consensus, then in the worst-case scenario money disappears as transactions settlements can be rendered invalid due to the collapse of a fork. The value of the Bitcoin may rise or plummet down into oblivion.

So, what’s in it for Bitcoin investors? Well, hopefully the stability of the network will be maintained, along with the consensus between most mining pools. What are your thoughts on this? Let us know in the comments below!