“How to Scale Bitcoin?” – Wrong Question!

If you have already invested in cryptocurrency, then it’s more than obvious for you to be worried with all the downfall in the market cap of the past few weeks. And for those who were planning on investing in crypto but due to its market crash, they would be taking a step back; or wonder about how to scale your bitcoins.

This is indeed a common but there is no need to worry because sooner or later the good days would once again shine for the crypto world. After all “What goes up must come down”; but what comes down doesn’t necessarily stays down. It would surely rise once again to keep the cycle repeating.

At such a time, many questions would come across your mind such as, “Why did the market crash? What was the cause? Would it be back to normal? What could be the solution now? etc.”

What is scaling of bitcoins? Why Scale bitcoins?

The bitcoin scalability problem refers to the discussion concerning 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.

How could adoption be increased?

It is quite obvious that Bitcoin has its ups and downs just like any other asset or currency. But Bitcoin unlike other currencies or assets or commodities, is solely based on the number of users; i.e. its value increases depending on the users, the amount of energy spent as well as on the algorithm difficulty.

Bitcoin is among the secure ways of storing value; since it involves no central party unlike the other currencies. It is basically a digital way of storing value through decentralisation.

The sole question of how to scale bitcoin, wouldn’t even be useful pondering on since it doesn’t even help in adoption. But, yes, scalability would mean that the transactions would indeed be faster and would sometimes even lower the fee for bitcoins. But that question doesn’t play a main role here.

The main purpose as mentioned time and again, is for the bitcoin technology to be a decentralised one.

Digital and Physical Relation –

Few people tend to say that, “Bitcoin has no value because there is no underlying asset”. But make sure to remind such people about the amount of energy spent for its mining process.

“The beauty of Proof-of-Work is that it requires an underlying asset outside the digital realm to be spent (energy = money), in order for consensus to be reached.”

But no, we cannot apply laws of physics, which says total energy spent equals total energy gained, to the crypto world. This is because miners would surely spend quite a lot of energy in the form of electricity for the mining process. But the raw input which is energy cannot be brought back, i.e. it cannot be refunded or redeemable.

Comparatively, Proof-of-Stake algorithms and protocols like Ethereum’s casper work similarly, in the sense miners would lose their stake if they tried to attack the network.
However, the problem is that there is no input outside the digital realm being spent in a great enough quantity, to increase the probability of good behaviour from miners.

The energy is in fact the relation between the digital and the physical world, which thus gives it an intrinsic value.

Basically what happens in Bitcoin is that, the more miners (validating nodes) who join the network, the harder it gets to mine Bitcoin, i.e. more amount of energy, thus adjusting the difficulty level of the hashing algorithm as shown in the diagram.

As the network becomes more secure, you need less nodes to validate so that you could be able to afford in order to make it harder for miners to get a reward, i.e. miners need to spend more energy to get a bitcoin block reward.

How are the above mentioned terms related to the initial adoption logic?

Even after discussing so many important terms and their explanations, we need to remember the most important core value of bitcoin, based on which we started the discussion in the first place.

This core value is nothing but the fact that everything present in the bitcoin network tends to work in such a way which basically avoids the absolute centralisation of the money. It also shows ways in which the supply could also be controlled even when the human nature tends to try and find a way in order to evade those features, purely for the sake of mere efficiency.

Thus, it is safe to say that scalability would indeed happen but in a way which you might not expect it to happen.

We already have the unique piece that allows for scalability to happen: an underlying asset people can use a store of value.
Whatever is built on top doesn’t really matter if the underlying layer, Bitcoin’s blockchain, is still used as the settlement layer.

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There are various ways in which you could improve your transaction throughput. Few examples ranges from batching and Shnorr signatures, to the Lightning Network and atomic swaps.

  • You could potentially have digital fiat-currencies redeemable for Bitcoin.
  • You can have other side-chains that interface with a single wallet app, meaning if it’s easy to exchange your tokens and other cryptocurrencies for Bitcoin, you will still use it as a base-layer to store your “gains”.

Thus in order to relate to the initial adoption logic, one must not just focus a lot on an event that would happen in the near future eventually. Such events include prices and technology, whose changes will surely happen eventually. So, rather a person must learn to take few steps back in order to revisit some of the core debates; which would clearly help in the overall acceptance of the Bitcoin.

What about the money spent as fees?

Yes, the initial fee is indeed high but one must understand the long term use of it. If you had to pay a high fee compared to the Ethereum or Litecoin transaction fee, definitely a person would not pay that amount. But he fails to realise that such a high fee is indeed for your long term guarantee; on the safety of your transactions as well as for secure storage of your assets.

You are clearly getting the best bank in the whole world in terms of crypto, then why should you have second thoughts in purchasing the premium?

Also, the main is not going into waste. This high fee charge is basically as an incentive to the miners; for them to spend as much energy as possible as well as to validate the transactions. This means that the fee is a sole reason for an economic ecosystem.

Hence, in order to keep the entire system alive, this high fee shouldn’t matter.

So, how can you scale cryptocurrency?

Well, to answer this question, it is now safe to say that there is no need to dig deeper into the capabilities of the technology.

Thus, the real challenge now is to create a particular ecosystem wherein any user could be easily rewarded; for participating in the mining process. This is because of the reason that there are already many solutions; which could prove that different consensus implementations might actually work.


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Navaneetha Suresh

Navaneetha Suresh

Navaneetha, commonly known as "nav", loves to read, play badminton, play the keyboard and sing but when she's not doing any of those, she loves to write. What started as a high school hobby to write is now her ongoing passion.

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