As the volume of transactions on the Bitcoin blockchain keeps increasing, transaction delays have become more apparent. The problem relates to how transactions are processed on the blockchain. Are there any solutions offered by the Bitcoin community yet?
Bitcoin got 99 problems but fiat money ain’t one
The average time it takes for a bitcoin transaction to be verified has increased significantly and some transactions remain unverified forever.
Some of the problem stems from the fact that anyone can add a fee to every bitcoin transaction, which bumps that transaction up in the queue, meaning that those who didn’t pay such a fee, or didn’t pay a sufficiently big fee may be waiting hours and sometimes even days for a transaction to complete.
The non-recognition of Bitcoin by governments and institutions has been another factor holding back the cryptocurrency from expressing its full potential. This is a factor that has also affected the Bitcoin identity.
Due to regulatory reasons, we have seen many countries, including the United States define Bitcoin as a commodity instead.
There have been several debates on how to resolve the challenges faced by Bitcoin, debates that have seen a couple of high profile developers leave the system, and some even declaring Bitcoin a failed currency.
Nevertheless, continued efforts by researchers to find solutions to the various problems that the cryptocurrency has faced legally, politically, technically and otherwise have continued.
Transaction malleability and Blocksize
In December 2015, Segregated Witness announced the impending release of its software that will grow blocksize within the Bitcoin blockchain.
As the Bitcoin world awaits this development by SegWit, experts are hopeful and think it might be a significant turning point in the life of the cryptocurrency.
Alejandro Sewrjugin, entrepreneur & Blockchain Innovation Expert, thinks that the effect of SegWit’s programme could be very big. Sewrjugin believes that SegWit will come to resolve two major problems; transaction malleability and blocksize.
According to him, the problem of malleability is a very old problem and finding a solution to it will boost trust and confidence within the system, and the second would bring an end to the debate and political fight between Bitcoin Core and Bitcoin Classic.
In addition, Sewrjugin says that it could also support a deeper widespread adoption of Bitcoin technology, fulfilling the promise to take it into the mainstream, as happened with the Internet in the past. So certainly, it opens up new possibilities due to the ease with which new code upgrades can be provided in a seamless manner.
Sewrjugin says to Cointelegraph:
“And as we know, technology adoption is fired up by the way it can be deployed and updated on a massive level - think about regular old software being installed on a client vs cloud usage. Add SegWit to the recent announcement by 21 Inc. about the way they can enable by code any computer as a Bitcoin computer and you have a "booming" combo in the near future to make Bitcoin/Blockchain technology a massive tool for everyone.”
Scalability and efficiency
William Gleim, Founding Member and Product Manager, Blockchain Technology Group, says:
“I'm excited to see Eric and Pieter push out segwit as it directly improves scalability and efficiency. I am more excited viewing segwit as foundation for the Schnorr signature scheme due to its potential to enhance and incentivize bitcoin user privacy.”
Schnorr signatures will provide further improvements to the scalability and efficiency of the Bitcoin network. Segwit allows Schnorr to work without a hard fork.
Market price impact
Alena Vranova of SatoshiLabs thinks that SegWit’s actions are strictly technical.
She says to Cointelegraph:
“SegWit is a technical update and should not influence the Bitcoin price directly. The timing in proximity to Bitcoin halving is rather a coincidence.”
The Founder of Cryptopay, a UK payment gateway, George Basiladze, believes that the actions of SegWit could generate a positive impact, but may take a while.
Basiladze told Cointelegraph:
“I believe that in [the] case [that] there would be any impact, SegWit will play only a positive role. However, I believe that there will not be any significant immediate effect after implementation of SegWit.”