Since its launch, bitcoin’s ability to scale effectively has often been questioned. By definition, Bitcoin is a cryptocurrency that exists within a network of computers, within the blockchain. This is a new ledger-recording technology.
The problem with this technology is that it’s slow. Especially in comparison to banks that deal with credit card transactions. Visa processes 150 million transactions per day, averaging about 1,700 transactions per second. The company’s capability far surpasses that, at 24,000 transactions per second.
How many transactions can the bitcoin network process per second? Seven. Transactions take about 10 minutes to process. As the network of bitcoin users grows, waiting times will become longer. Since there are more transactions to process without a change in the underlying technology that processes them.
In July 2017, mining pools and companies representing roughly 80% to 90% of bitcoin computing power voted to incorporate a technology known as SegWit2x. SegWit2x makes the amount of data that needs to be verified in each block smaller. Talk of doubling the size of blocks from 1mb to 2mb ramped up in 2017 and 2018, and, as of February 2019, the average block size of bitcoin increased to 1.305mb, surpassing previous records.
The larger block size helps in terms of improving bitcoin’s scalability. In September 2017, research released by cryptocurrency exchange BitMex showed that SegWit implementation had helped increase the block size, amid a steady adoption rate for the technology. In late 2017, scientists from Bitcoin Unlimited revealed they had mined the world’s first 1GB block, 1,000 times bigger than the normal size.
Bitcoin cash was started by bitcoin miners and developers equally concerned with the future of the cryptocurrency and its ability to scale effectively. However, these individuals had their reservations about the adoption of a segregated witness technology. They felt as though SegWit2x did not address the fundamental problem in a meaningful way. Nor did it follow the roadmap initially outlined by Satoshi Nakamoto, the anonymous party that first proposed the blockchain technology behind cryptocurrency. Furthermore, the process of introducing SegWit2x as the road forward was anything but transparent, and there were concerns that its introduction undermined the decentralization and democratization of the currency.
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