Bitcoin's scalability problem and the solutions being explored (Lightning Network)
The scalability problem is present in Bitcoin because of low throughput of the scaling of approximately seven transactions per second. This is due to its block size being equal to 1MB and having an average creation time of ten minutes for each block. Thus, with intensive use of a network, a blockchain clogs up with the congestion of the everyday micro-transactions.
Because of this, many solutions are being sought after. One such popular Layer-2 solution is the Lightning Network, which enables faster and cheaper transactions by creating off-chain payment channels. Users can perform as many transactions as they want within those channels, but the final state gets recorded on the main blockchain, relieving network congestion to a great extent. This retains the security of Bitcoin while improving its transaction capacity.
Then there is Segregated Witness, SegWit for short, brought online in 2017. It increases the block size by segregating the transaction signature from the actual transaction data and fitting more per block in that way.
Other ideas involve using techniques such as Schnorr signatures to decrease size through representing several complex signatures as one. With each solution, some trade-off has to be made: either by upping the ante of complexity or by partial centralization.
While each of these approaches represents an exciting avenue through which Bitcoin could scale, it is still a challenge to the developers and greater community to find that balance among scalability, security, and decentralization.
~ Regards,
VEIGO (Community Mod)
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