In case you have used bitcoin during the last couple of months, then chances are that you have heard about the block size debate, a topic that we have covered briefly before, and which has managed to divide the bitcoin community into separate sides.
In today’s article, we’ll take a look about what the controversy really is, and get into a few technical aspects, while keeping things as easy to comprehend as possible.
To kick things off, blocks, which consist of bitcoin transactions that are put on the blockchain, are currently limited to 1 MB in size. This limitation allows a fixed number of transactions to be included in a block, and an average number of 7 bitcoin transactions/second to be carried out throughout the bitcoin market. As the digital currency continues to grow, people will want to carry out a significantly larger number of transactions, thus leading to delays, as the blockchain will not be able to process so many transactions, in such a short period of time. One such example is the bitcoin traffic jam that has persistent through the first two weeks of March 2016, when over 40,000 bitcoin transactions were delayed on the blockchain, and hours and days to be confirmed.
Now, modifying the block size limit requires something known as a hard fork, which means that all active bitcoin nodes should agree with, and adopt the change, in order to make it happen.
Currently, while for many, increasing the block size limit seems like the best choice, there are arguments both in favour of, and against the change. Those in favour pinpoint the possibility to carry out more transactions per second, thus preventing delays.
On the other side of the spectrum, there are also a few negative aspects of the change. The main issue consists of higher fees for the users, needed to incentivise miners (which may in turn reduce investment, support, and adoption of the coin). Not only this, but due to lower fees, bitcoin competitors will seem more attractive to those just getting started with digital currencies. Together with this, before a hard fork is implemented, sufficient consensus is needed. If it’s not met, then there is a catastrophic risk of the currency volatility spinning out of control. Additionally, a faster block propagation can create centralised control of the currency, which is against bitcoin’s definite principle of being a digital, decentralized currency with no central authority governing over it.
Based on everything that has been outlined so far, what do you personally think about the block size debate? Should we sacrifice transaction times for lower fees, or vice versa? Let us know your thoughts in the comment section below.