As Bitcoin continues to grow in popularity and value, the network’s capacity issues are becoming even more evident with the number of unconfirmed transactions reaching record-breaking figures.
Unconfirmed Transactions Reach ATH
It is well-known that the Bitcoin network is currently running at full capacity. With two popular scaling proposals competing for miner approval, there seems to be no resolution in sight. In the meanwhile, the situation is getting worse every day with the number of unconfirmed transactions reaching a record figure of 155k transactions yesterday.
Since then, this number has gone down to roughly 65k, but that is still an extremely worrying figure. There are currently over 85 BTC or USD $134,000 in transaction fees stuck in Blockchain.info’s mempool.
Although all nodes keep their own version of the mempool, most nodes are limited to about 150MB. Once this limit is reached, transactions with the lowest fees are dropped. This means that some transactions may never go through and are instead returned to the sender as if they never took place.
The overcapacity issues in the Bitcoin network have created a scenario where transactions are either expensive or slow. Users that pay larger fees can see their transactions processed at a faster rate, while those who cannot pay higher fees have to wait for a miner to include them in a block, which will only occur once the transactions with larger fees have been processed.
What does this mean for Bitcoin?
Despite the scaling issues within the network, Bitcoin continues to gain popularity throughout the world as prices surge to new heights.
Although Bitcoin finds its popularity among new users mainly as an investment vehicle or store of value, the growing number of unconfirmed transactions show that Bitcoin is also being used as a decentralized payment system, allowing people to transact with lower fees, faster times, and complete control of their funds.
Overall, the scalability issues can be seen both as a pressing problem and as a reason to celebrate. During an episode of the Double Down show, Charlie Shrem, Bitcoin entrepreneur and co-founder of Intellysis talked about what could be called Bitcoin’s Champagne Problem. He said:
It’s a good problem to have. Bitcoin has grown really quickly. We never expected this to happen so quickly, to be honest. We’re getting towards what they call a ‘champagne problem,’ how do you scale?
No end in sight
Although one can have a positive outlook on Bitcoin’s scaling issues, this is still a problem that needs to be fixed in order for Bitcoin to maintain its momentum. Otherwise, transaction fees and transaction times will continue to grow as shown below:
Average #Bitcoin transaction fee breaks $1.50! pic.twitter.com/L2bs3aecuf
— Blockchair (@Blockchair) May 6, 2017
If fees continue to grow at such an alarming rate, Bitcoin transactions will soon be as expensive as some bank transfers. For example, a bank transfer within the SEPA region costs 0.50€, less than an average Bitcoin transaction fee at the moment.
Despite this, there seems to be no end in sight for the current scaling debate. With both SegWit and Bitcoin Unlimited currently stuck in the 30%-40% levels in terms of miner approval, its hard to tell if either solution will ever be adopted or if it will come down to a User Activated Soft Fork.
Will Bitcoin miners be able to choose a scaling solution before it’s too late? Can these scaling issues become the end of Bitcoin? Let us know in the comments below.
Images courtesy of Blockchain.info, Coin.Dance