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Bitcoin scalability issue

The number of transactions in the Bitcoin system per month
Unexcited Bitcoin Transaction Exits

The problem of scalability of Bitcoin is associated with the initial limitation by developers of one megabyte in size of the basic structure for storing data (block) in its blockchain [1] [2] [3] . This restriction is dictated by the peculiarity of building a blockchain as a fully replicated distributed database , which requires constant transfer between all participants of each new element. Reducing the block size significantly limits the effectiveness of a potential DDoS attack. If we take into account the average time for the formation of the block (10 minutes) and the average size of information about the transaction, then for the guaranteed placement in the block the number of transactions should not be too large - at the level of about three transactions per second.

With the popularity of Bitcoin, the number of transactions increased, but due to the limitation of the maximum block size, not all transactions were "placed" immediately, a queue appeared periodically. In May 2017, the situation worsened significantly, the expectation of the transaction being included in the block reached several days [4] [5] .

In the Bitcoin system, a user can voluntarily set a commission to speed up processing. The regular occurrence of a queue led to an increase in transaction fees, but did not eliminate the delay in processing transactions. This makes using bitcoins quite expensive and time consuming, especially for small payments - it makes no sense to use them, for example, in cafes and bars [4] .

Various methods have been proposed to solve the problem. In 2017, Business Insider characterized this debate as an “ideological battle for the future of Bitcoin” [6] .

Forks

The main sequence of blocks (black) is the longest from the initial (green) to the current. Forks give rise to side branches (purple), which are subsequently cut off

Blockchain fork - dividing a continuous chain into two branches. This division in the Bitcoin network is part of the algorithm and occurs regularly during the mining process. New blocks always contain a reference to the predecessor. If two blocks formed by different miners refer to the same predecessor block, this is division. The system does not give automatic preference. New blocks can indicate any of them as a predecessor. As a result, the network is divided for some time. At some point, one of the branches will become longer and the “lagging behind” will die off, since the system considers the longest chain to be true.

The blockchain can also be shared when developers change the protocol for determining which blocks are valid [7] .

Hard Fork

“ Hard fork ” is the splitting of the blockchain into two separate chains as a result of using two different protocols [8] . The new protocol can also split the network if all network participants do not follow it [7] . For example, Ethereum Classic arose as a result of the Ethereum hard fork due to a different understanding of the necessary actions in response to a DAO hack [9] [10] .

The Bitcoin XT, Bitcoin Classic, and Bitcoin Unlimited communities have proposed increasing the block size limit as a way to increase scalability. However, support for both proposals fell over time [6] [11] .

SoftFork

According to CoinDesk , unlike “hard fork”, “soft fork” is a protocol change, as a result of which the created blocks are recognized as valid and old software [7] . According to Investopedia , “soft fork” can also share the network if non-updated software creates blocks that will not be considered valid under the new protocol [12] .

One of the founders and developer of Blockstream, Peter Will, in December 2015, proposed changes in the form of "soft fork", called SegWit [13] [14] . SegWit involves storing part of the data (public keys) outside the blockchain. CoinTelegraph suggests that SegWit will allow the creation of new second-level solutions on top of bitcoin [14] .

User-activated soft fork (UASF) is a controversial idea that allows you to understand how to perform a blockchain update that is not supported by those who provide network power [7] .

Proposed Solutions

Various suggestions for scaling bitcoin were presented. In 2015, Jeff Garzik introduced the BIP 100, and Gavin Andresen introduced the BIP 101 [2] . In mid-2015, some corporations supported an increase in block size of up to eight megabytes [15] .

  • Bitcoin XT was proposed in 2015 to increase the processing power of Bitcoin transactions by increasing the block size limit [16] .
  • Bitcoin Classic was proposed in 2016 in order to increase bitcoin processing performance by increasing the block size limit [17] .
  • In 2016, an agreement was signed between some miners and developers, which was colloquially called the “Hong Kong Agreement”, which contained a schedule during which both the SegWit proposal made in December 2015 by Bitcoin Core developers and the increase in the size limit would be considered block up to 2 MB. However, both agreements were not successful [18] .
  • Bitcoin Unlimited protects the flexibility of miners to increase the block size limit and is supported by ViaBTC, AntPool mining pools, investor Roger Werth and Bitcoin Unlimited chief scientist Peter Rizun [19] . The Bitcoin Unlimited offer differs from Bitcoin Core in that the block size parameter is not hard-coded, but rather the nodes and the union of miners maintain the size they want using the idea that they call “emerging consensus” [19] . Those who are behind the Bitcoin Unlimited offer argue that from an ideological point of view, miners should decide on a solution to scaling, as they are those whose equipment supports the network [20] .
  • BIP148 is a proposal called “User Activated SoftFork” (UASF) or “populist uprising.” It was planned to be launched on August 1, 2017, and it tried to force miners to activate SegWit [21] . This became unnecessary because miners decided to vote for the activation of SegWit using the BIP91 scheme.

Implemented Solutions

Segregated Witness (SegWit)

SegWit:

  • Changes the structure of data storage in each block of bitcoin [22] .
  • Provides increased transaction throughput, while remaining compatible with earlier versions of Bitcoin software [22] .
  • Eliminates transactional inertia, which has become an obstacle to other bitcoin projects [22] .
  • The implementation of the Lightning Network has become feasible [23] .

Activation

In May 2017, the Digital Currency Group (not confusing with the MIT Media Lab Digital Currency Initiative) announced a solution called SegWit2x (“New York Agreement”), [24] activating SegWit at the 80% threshold for the overall bitcoin hash rate, signaling on bit 4; and raise the block size limit to 2 MB for six months with support exceeding 80% of the total bitcoin hash rate [25] . In June 2017, the SegWit proposal was further complicated by the claim that it could infringe on patents filed in USIPO [26] . As of mid-2017, the SegWit2x proposal supported more than 90% of the hash rate, however, the SegWit2x proposal was controversial in that the work on the project was limited by invitation only [24] . In mid-July 2017, it became apparent that miners supported the implementation of the SegWit clause of the agreement until August 1, 2017, UASF, thereby trying to avoid the risk of a “hard fork” of the Bitcoin network [27] [28] [29] . On July 21, BIP 91 was blocked, which meant that the SegWit update was activated on block 477 120 [30] . By August 8, another step was reached when 100% of Bitcoin mining pools announced support for SegWit, although SegWit was not fully activated until at least August 21, after which miners began to abandon blocks that do not support SegWit [31] . August 24, 2017 (at block 481 824) was implemented [22] . Most Bitcoin transactions did not use the update, but they were not able to do this, since the standardization of the BIP 173 address format was not completed. In the first week of October, the share of Bitcoin operations using SegWit increased from 7% to 10% [32] .

Bitcoin Cash

Bitcoin Cash , the “hard fork” of the Bitcoin blockchain, appeared on August 1, 2017 (from block 478 559) [33] [34] . After the “hard fork”, Bitcoin holders, in addition to their Bitcoin (BTC), had the same amount of Bitcoin Cash (BCH) [35] . Bitcoin Cash increased the block size from one megabyte to eight megabytes without including SegWit [36] . By the evening of August 1, 2017, BCH ranked third in terms of capitalization among all cryptocurrencies (after BTC and Ethereum) [37] . Many cryptocurrency exchanges suspended service for several days, including August 1, 2017 [38] [39] [40] [41] . Americans are wondering if their purchase of Bitcoin Cash is taxed as income or not, since the separation of ownership does not receive any instructions from the US Internal Revenue Service [42] .

Other suggestions

SegWit2x

The implementation of SegWit in August 2017 was only the first half of the so-called “New York Agreement”, according to which those who wanted to increase the effective block size of SegWit compromised those who wanted to increase the block size with a hard fork to a larger block size [43 ] . The second half of SegWit2x includes a “hard fork” in November 2017, to increase the block size to 2 megabytes [44] .

SegWit was created by people not affiliated with SegWit2x, and many of them are against SegWit2x [45] .

The heavy fork of SegWit2X is even more controversial than the hard fork of Bitcoin Cash [46] . Some companies that initially supported the New York Agreement did not support the proposal, including F2Pool, Bitwala, SurBTC and Wayniloans [47] [48] [49] . Hard fork in November could lead to another Bitcoin blockchain in addition to the second blockchain created in August [50] . Several parties to the New York Agreement (including Coinbase, Blockchain, and Xapo) indicated that they would not decide which chain should be called Bitcoin before committing to a hard fork. [51]

The main problem is the choice of SegWit2x developers to implement re-spending protection in another chain, rather than the strong re-spending protection implemented by the Bitcoin Cash hard fork [52] . Re-spending protection means that the Segwit2x chain will continue to accept transactions destined for the original chain, in addition to the roll-back transactions valid only for Segwit2x. Users who send transactions in the original Bitcoin chain, or who cannot send Segwit2x transactions with re-protection, will be vulnerable if their transactions are repeated in another chain. This can lead to an accidental loss of funds. This lack of strong repetition protection caused considerable controversy in the Bitcoin community [53] .

Greg Maxwell, a well-known member of Bitcoin Core and an employee at Blockstream, said the previous agreement to increase the size of the block was made under pressure [54] . The implementation of SegWit2x will increase commission fees for miners and reduce the transaction fees that Blockstream organizes on the side chains, as well as increase the power of miners while reducing the power of major developers [55] .

Block No. 501451, which will be produced tentatively on December 28, 2017, may become crucial for the new (old) branch of Segwit2x. As it became known [56] , the development team announced the resumption of active work to launch a suspended project. According to the project’s website [57] , the team intends to implement the “hard fork” of Bitcoin Segwit2x, which was expected back in mid-November. At the same time, developers add, trading in Segwit2x hard fork futures on some exchanges, including HitBTC , is still ongoing.

Lightning Network

Lightning Network is a project in development, the purpose of which is to eliminate the problem of scalability of Bitcoin by scaling "outside the network." It is designed to ensure updating the state of the microchannel without the use of any locks (in the usual non-adversarial case), which makes micropayments justified (and without commission). The Lightning Network will require that a blockchain financing transaction open a channel. The Lightning Network is currently in the alpha development phase [58] .

See also

  • Software development

Notes

  1. ↑ The Three Major Bitcoin Protocols Explained , Investopedia (October 18, 2016). Date of treatment January 18, 2017.
  2. ↑ 1 2 Andrew Marshall . Bitcoin Scaling Problem, Explained , The Coin Telegraph (2 March 2017). Date of treatment July 4, 2017.
  3. ↑ Andreas M. Antonopoulos. Mastering Bitcoin. Unlocking Digital Crypto-Currencies. - O'Reilly Media, April 2014 .-- ISBN 978-1-4493-7404-4 .
  4. ↑ 1 2 Kozlovsky, Sergey Bitcoin fell into two currencies: how it happened (neopr.) . Russian service of the BBC (1.08.2017). Date of treatment August 1, 2017.
  5. ↑ Jordan Pearson . 'Bitcoin Unlimited' Hopes to Save Bitcoin from Itself , Motherboard , Vice Media LLC (October 14, 2016). Date of treatment January 17, 2017.
  6. ↑ 1 2 Oscar Williams-Grut and Rob Price . A Bitcoin civil war is threatening to tear the digital currency in 2 - here's what you need to know , Business Insider (March 26, 2017). Date of treatment July 2, 2017.
  7. ↑ 1 2 3 4 Amy Castor . A Short Guide to Bitcoin Forks , CoinDesk (March 27, 2017). Date of treatment July 1, 2017.
  8. ↑ Can Bitcoin Hard Fork? , Investopedia (21 March 2017). Date of treatment June 8, 2017.
  9. ↑ Adinolfi, Joseph . Exclusive: Grayscale launches digital-currency fund backed by Silver Lake's co-founder Hutchins , MarketWatch .
  10. ↑ Wirdum, Aaron van Rejecting Today's Hard Fork, the Ethereum Classic Project Continues on the Original Chain: Here's Why (unopened) . Bitcoin Magazine . Date of appeal April 27, 2017.
  11. ↑ Alyssa Hertig . Keep Calm and Bitcoin On? Developers Aren't Worrying About a Fork , CoinDesk (24 May 2017). Date of treatment July 1, 2017.
  12. ↑ Soft Fork (Neopr.) . investopedia.com . Investopedia. Date of treatment July 21, 2017.
  13. ↑ Corin Faife . Will 2017 Bring an End to Bitcoin's Great Scaling Debate? , CoinDesk (January 5, 2017). Date of treatment July 4, 2017.
  14. ↑ 1 2 Andrew Marshall . SegWit, Explained , CoinTelegraph (April 20, 2017). Date of treatment July 1, 2017.
  15. ↑ Evander Smart . 'Why is My Bitcoin Transaction Taking So Long?' Here's Why , The Coin Telegraph (October 19, 2016). Date of treatment July 4, 2017.
  16. ↑ Alex Hern. Bitcoin's forked: chief scientist launches alternative proposal for the currency (neopr.) . the Guardian . Date accessed August 20, 2015.
  17. ↑ Making Sense of Bitcoin's Divisive Block Size Debate , CoinDesk (January 19, 2016). Date of treatment June 22, 2017.
  18. ↑ Pete Rizzo & Alyssa Hertig . Bitcoin's New Scaling 'Agreement': The Reaction , CoinDesk (24 May 2017). Date of treatment June 29, 2017.
  19. ↑ 1 2 Alyssa Hertig . CoinDesk Explainer: The Bitcoin Unlimited Debate , CoinDesk (14 May 2017). Date of treatment June 29, 2017.
  20. ↑ Pete Rizzo . CoinDesk Explainer: Bitcoin Unlimited: Mining Power Should Determine Hard Fork , CoinDesk (March 20, 2017). Date of treatment July 2, 2017.
  21. ↑ Alyssa Hertig . Bitcoin's 'Independence Day': Could Users Tip the Scales in the Scaling Debate? , CoinDesk (June 8, 2017). Date of treatment June 29, 2017.
  22. ↑ 1 2 3 4 Hertig, Alyssa SegWit Goes Live: Why Bitcoin's Big Upgrade Is a Blockchain Game-Changer (unspecified) . CoinDesk (August 23, 2017). Date accessed August 23, 2017.
  23. ↑ van Wirdum, Aaron Segregated Witness Activates on Bitcoin: This is What to Expect (unopened) . Bitcoin Magazine (August 23, 2017). Date accessed August 24, 2017.
  24. ↑ 1 2 Alyssa Hertig . Top secret? Bitcoin Scaling Plan Segwit2x Leaves More Questions Than Answers , CoinDesk (23 June 2017). Date of treatment June 29, 2017.
  25. ↑ Leading bitcoin ecosystem participants reach consensus on scaling issue , Econo Times , Econo Times (25 May 2017). Date of treatment June 23, 2017.
  26. ↑ Segregated Witness and the Possibility of Patent Infringement , Nigeria Times , Nigeria Times (3 June 2017). Archived July 28, 2017. Date of treatment June 23, 2017.
  27. ↑ CNBC Dispute could mean financial panic in bitcoin (neopr.) . Associated Press (July 14, 2017). Date of treatment July 19, 2017.
  28. ↑ Suberg, William Suddenly, Bitcoin Hard Fork Looks Unlikely As Chinese Exchange Readies For SegWit (neopr.) . COINTELEGRAPH (July 18, 2017). Date of treatment July 18, 2017.
  29. ↑ Castor, Amy CoinDesk Explainer: How BIP 91 Enacts SegWit While Avoiding a Bitcoin Split (unspecified) . CoinDesk (July 18, 2017). Date of treatment July 18, 2017.
  30. ↑ Hertig, Alyssa BIP 91 Locks In: What This Means for Bitcoin and Why It's Not Scaled Yet (unopened) . CoinDesk (July 21, 2017). Date of treatment July 21, 2017.
  31. ↑ Hertig, Alyssa It's Official: Segregated Witness Will Activate on Bitcoin (unopened) . CoinDesk (August 8, 2017). Date of treatment August 9, 2017.
  32. ↑ Suberg, William Bitcoin: $ 4,600, 50% Dominance, Forks Leave Altcoins No Room For Moon (neopr.) . CoinTelegraph (October 9, 2017). Date of treatment October 9, 2017.
  33. ↑ Coleman, Lester Bitmain Clarifies Its 'Bitcoin Cash' Fork Position (neopr.) . CryptoCoinsNews (July 25, 2017). Date of treatment July 27, 2017.
  34. ↑ Popper, Nathaniel Some Bitcoin Backers Are Defecting to Create a Rival Currency (unopened) . The New York Times (July 25, 2017). Date of treatment July 28, 2017.
  35. ↑ Song, Jimmy Bitcoin Cash: What You Need to Know (unopened) . Medium (July 24, 2017). Date of treatment July 28, 2017.
  36. ↑ Norrie, Adam Bitcoin Cash: Another Fork in the Road for Bitcoin (neopr.) . CryptoCoinsNews (July 29, 2017). Date of treatment July 29, 2017.
  37. ↑ Pollock, Darryn Bitcoin Cash Third-Biggest Cryptocurrency On First Day of Creation (unspecified) . CCN (2 August 2017). Date of treatment August 2, 2017.
  38. ↑ Gatecoin Service Preparation for the UASF and MAHF on 1 August 2017 (neopr.) . Gatecoin (July 28, 2017). Date of treatment July 28, 2017.
  39. ↑ Helms, Kevin 13 Japanese Exchanges Agree to Suspend Bitcoin Service on August 1 (neopr.) . bitcoin.com (July 18, 2017). Date of treatment July 27, 2017.
  40. ↑ Our plans to handle potential BTC network disruptions ( unspecified ) . Poloniex (July 24, 2017). Date of treatment July 27, 2017.
  41. ↑ Bitcoin Hard Fork: Our Position (unopened) . Bitstamp (July 27, 2017). Date of treatment July 27, 2017.
  42. ↑ Saunders, Laura No One Knows How Much to Pay in Bitcoin Cash Taxes (Neopr.) . The Wall Street Journal (August 25, 2017). Date of treatment August 25, 2017.
  43. ↑ Haywood, Matthew Segwit2x, 'The New York Agreement' (neopr.) . bravenewcoin.com (August 16, 2017). Date of treatment October 6, 2017.
  44. ↑ Hertig, Alyssa Explainer: What Is SegWit2x and What Does It Mean for Bitcoin? (unspecified) . CoinDesk (July 12, 2017). Date of treatment October 6, 2017.
  45. ↑ Bitcoin Core :: Correcting misinformation on Segwit2x and btc1
  46. ↑ Suberg, William SegWit2x 'Maximum Disruption' Could Be Sending Bitcoin Towards $ 4000 (unopened) . cointelegraph.com (October 4, 2017). Date of treatment October 10, 2017.
  47. ↑ tendencialglobal Segwit2X loses support between mining groups and blockchain companies (neopr.) . cryptocurrency . Steemit (September 18, 2017). Date of treatment October 7, 2017.
  48. ↑ Wilmoth, Josiah SegWit2x, NYA Bitcoin Agreement Loses Another Signatory ( unopened ) . cryptocoinsnews.com (September 19, 2017). Date of treatment October 11, 2017.
  49. ↑ Suberg, William Barry Silbert Agreement Loses Support As SurBTC Exchange Appeals to Bitcoin Core Devs ( unspecified ) . cointelegraph.com (October 10, 2017). Date of treatment October 10, 2017.
  50. ↑ Hertig, Alyssa Calm Before the Fork? Segwit2x Goes Silent as Bitcoin Spilt Looms ( unopened ) . CoinDesk (October 6, 2017). Дата обращения 6 октября 2017.
  51. ↑ Wilmoth, Josiah Bitcoin Wallet BitGo's Segwit2x Stance 'Based Primarily on Market Price' (неопр.) . cryptocoinnews.com (3 November 2017). Date of treatment November 4, 2017.
  52. ↑ Song, Jimmy How Segwit2x Replay Protection Works (неопр.) . bitcointechtalk.com (4 October 2017). Дата обращения 6 октября 2017.
  53. ↑ van Wirdum, Aaron SegWit2X and the Case for Strong Replay Protection (And Why It's Controversial) (неопр.) . Bitcoin Magazine (22 September 2017). Дата обращения 6 октября 2017.
  54. ↑ "Developers Unilaterally Tore Up the Agreement" Says Bitcoin Miner
  55. ↑ Piasecki, Piotr Blockstream vs miners - looking at the incentives around the SegWit2x fork (неопр.) . bravenewcoin.com (31 October 2017). Date of treatment November 3, 2017.
  56. ↑ Segwit2x, или старый новый хардфорк биткоина / forklog
  57. ↑ B2X (SegWit2x) — Hard Fork Bitcoin
  58. ↑ The Bitcoin Lightning Network: Scalable Off-Chain Instant Payments (неопр.) . Date of treatment November 2, 2017.
Источник — https://ru.wikipedia.org/w/index.php?title=Проблема_масштабируемости_биткойна&oldid=100434956


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Clever Geek | 2019