Bitcoin scalability problem

in bitcoin •  2 months ago

The bitcoin (the ability to be made bigger or smaller) problem refers to the discussion about the limits on the amount of transactions the bitcoin network can process. It is related to the fact that records (known as blocks) in the bitcoin blockchain are limited in size and frequency. Bitcoin's blocks contain the transactions on the bitcoin network.The on chain transaction processing ability (to hold or do something) of the bitcoin network is limited by the average block creation time of 10 minutes and the block size limit. These both/together hold back the network's throughput. The transaction processing ability (to hold or do something) greatest possible is guessed (number) between 3.3 and 7 transactions per second. There are different proposed and activated solutions to deal with this issue.

The block size limit has created a bottleneck in bitcoin, resulting in increasing transaction fees and delayed processing of transactions that cannot be fit into a block. Different proposals have come forward on how to scale bitcoin, and an argument-causing debate has resulted. Business Insider in 2017 showed/described this debate as an "idea-based fight over bitcoin's future.

Hard fork
A hard fork is a rule change such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid. In case of a hard fork, all nodes meant to work (going along with/obeying) the new rules need to upgrade their software.

If one group of nodes continues to use the old software while the other nodes use the new software, a split can happen. For example, Ethereum has hard-forked to "make whole" the (people or businesses who give money to help start businesses) in The DAO, which had been hacked by fully using (for profit) a weakness (that could be used to hurt someone or something) in its code. In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to think about a hard fork that would have led to a rollback of the blockchain records to lessen (something bad) the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the money was recovered after (back-and-forth conversations to agree on something) and ransom payment.

Or,/In a different way, to prevent a permanent split, a majority of nodes using the new software may return to the old rules, as was the case of bitcoin split on 12 March 2013.

Bitcoin Cash is a hard fork of bitcoin increasing the maximum block size. Bitcoin XT, Bitcoin Classic and Bitcoin Unlimited all supported an increase to the maximum block size through a hard fork.

Soft fork
In contrast to a hard fork, a soft fork is a change of rules that creates blocks recognized as valid by the old software, (in other words) it is backwards-compatible. As for a hard fork, a soft fork can also split the blockchain when non-upgraded software creates blocks not thought about/believed valid by the new rules.

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