Since its inception, there have been questions surrounding Bitcoin’s ability to scale effectively. Bitcoin is a cryptocurrency that exists within network of computers, within the blockchain. This is revolutionary ledger-recording technology. It makes ledgers far more difficult to manipulate for a couple reasons: The reality of what has transpired is verified by majority rule, not by an individual actor. And this network is decentralized; it exists on computers all over the world.
The problem with this technology is that it’s slow. Like, really slow, especially in comparison to banks that deal with credit card transactions. Visa processes 150 million transactions per day, averaging out to roughly 1,700 transactions per second. And their capability far surpasses that, at 24,000 transactions per second.
How many transactions can the Bitcoin network process per second? Seven. Transactions take about 10 minutes to process. And as the network of Bitcoin users grows, waiting times will get longer, because there are more transactions to process without a change in the underlying technology that processes them.
The latest debates around Bitcoin’s technology have been concerned with this central problem of scaling and increasing the speed of the transaction verification process. There are two major solutions to this problem, either to make the amount of data that need to be verified in each block smaller, making transactions faster and cheaper or to make the blocks of data bigger, so that more information can be processed at one time.
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