Only off-chain solutions can scale effectively in the long term, according to Microsoft.

Much to the chagrin of Bitcoin Cash adherents, Microsoft today stated support for public blockchains such as Bitcoin, Litecoin, and Ethereum in the implementation of their decentralised identity system, or DIDs - but specifically rejected bigger block-size technology as a scalability solution.

Although they did not go so far as to mention Bitcoin Cash by name, Microsoft dismissed the larger block size approach implemented by Bitcoin Cash as a valid solution, claiming it would be insufficient for large-scale volume demands. The post from Microsoft explained that in order to achieve true decentralisation and high transaction capacity and speed, off-chain solutions would be necessary to achieve world-scale transactions in the millions per second.

Bitcoin Cash eschewed off-chain solutions provided via SegWit when it forked from Bitcoin in the summer of 2017, instead choosing larger blocks as a scaling solution. While the larger block size did address problems Bitcoin was facing at the time (slow and expensive transactions), off-chain solutions via SegWit, such as the Lightning Network, will enable a much greater transaction volume and speed capacity than large blocks alone could ever achieve. Bigger block size, as argued prior to the fork, was a band-aid solution that, it turns out, might not provide long-term benefits.

Off-chain, or layer-two solutions, will also offer interesting tools in the Bitcoin belt, such as smart contracts via the Rootstock side-chain. It will be interesting to see if Microsoft decides to pursue partnerships with already-existing blockchain identity companies such as Civic, who will be using the Rootstock side-chain.

Expect to see more momentum gaining for Bitcoin as SegWit enables impressive growth in scalability and utility for the coin in the coming months.

*This is not professional trading advice - it's just my opinion!

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sources:
https://www.forbes.com/sites/ktorpey/2018/02/12/microsoft-to-embrace-decentralized-identity-systems-built-on-bitcoin-and-other-blockchains/#618aa8b95ada
https://cloudblogs.microsoft.com/enterprisemobility/2018/02/12/decentralized-digital-identities-and-blockchain-the-future-as-we-see-it/