At this moment in time, bitcoin’s underlying support, the blockchain system is doing its job very well. Yet, as the digital currencies continue to advance, and be adopted by more and more people, studies have shown that the blockchain network may face a couple of limitations that would need to be fixed as soon as possible.
With this in mind, one of the main issues of the blockchain network, which has been highly debated in the past, is scalability. As bitcoin was initially designed to support lightweight clients, the network can only verify a set number of transactions during a predefined period of time. If more and more people would begin using bitcoin, the block size alongside with the scalability issues could lead to slower transactions, which could take hours or even days to complete, thus making bitcoin and its network obsolete.
To put things better into perspective, VISA currently handles roughly 2,000 transactions per second on average, and sometime handles even 4,000 depending on how busy the day is. Yet, the network behind the credit/debit card provider is capable of supporting 56,000 transactions per second. PayPal can currently handle around 10 million transactions per day, which is an average of 115 transactions per second.
If Bitcoin were to scale all of the world’s cashless transactions, then the bitcoin network should be able to support a considerably higher number of transactions per second. This could be achieved by increasing the blocksize, yet there are several contentions to doing this. Some of these disadvantages are risk of consensus failure, the orphan rate amplification, congestions on the network, the fact that fast block propagation isn’t viable yet, while also issuing several damages to the decentralized status of bitcoin.
Several proposals such as BIP 109, 103, 102, 101 and 100 have been made so far, yet none has resulted into an actual fork on the network. Bitcoin Classic, introduced with BIP 109 has gathered some fans, yet most people stayed on the normal Bitcoin network.
Leaving aside the blocksize debate alongside with the scalability issues, the bitcoin blockchain network has a couple of other challenges that it needs to face. Some of these include solving issues such as transaction speeds, data limits, the verification process, while also dealing with the uncertain regulatory status as each country continues to set its own blockchain-related laws. Other challenges are related to the large rate of energy consumption, the integration and adoption concerns, the control, security and privacy of the network alongside with its actual cost, which can become quite expensive given a decrease in bitcoin’s value.
To solve all of these issues, the bitcoin and blockchain community has to unite, and debate technical ideas and changes that would help fix the challenges outlined above. This is needed as soon as possible, considering bitcoin’s fast rise to power alongside with the recent value increases.
Based on everything that has been outlined so far, what do you personally think about the challenges being faced by the bitcoin blockchain technology? Let us know your thoughts in the comment section below.