As Bitcoin sees a stratospheric rise over the last few days, increasing by $100 in just a day, users have noted a corresponding increase in transaction confirmation delays.
More than 250,000 bitcoins were waiting to move at one point yesterday, according to tradeblock, currently valued at almost $200 million. Tradeblock’s mempool, which tracks confirmation delays, reached an all-time high (ignoring last summer’s capacity tests) of 45MB. Tens of thousands of transactions and hundreds of thousands of bitcoins continue to be stuck for hours or days.
Bitcoin users took to reddit en-mass to complain and seek information. At one point, the whole front page was covered by the topic with seemingly new Bitcoin users asking for help. Some, however, maintain that the hundreds of millions of dollars’ worth of Bitcoin are all just spam or, in some way, some sort of attack.
Hashrate Increase Briefly Increased Capacity
The Bitcoin network has been running at full capacity for the past six months due to demand seemingly surpassing an artificial transaction cap of approximately 250,000 transactions a day or around 2-2.5 transactions a second.
An increase in hash-power last month by almost 30% or more increased capacity for a few weeks, allowing the network to run at an all-time high of four transactions per second without any significant delay. During the same period price rallied by almost $300, primarily due to China and the expected halving.
The brief respite in transaction capacity has now ended as difficulty adjusted to account for the new hashpower, returning Bitcoin blocks to their normal distribution of approximately one block per ten minutes, but the network continues to run at almost four transactions per second, thus creating the all-time high backlog.
Proposed Solutions to Full Capacity
One proposed solution is Segregated Witnesses, which is undergoing final review to provide, amongst many other things, a small capacity increase to 1.5 – 1.8 MB. Activation is expected in early Autumn at best as binaries have not yet been released, with further potential delays from wallet providers and businesses, all of which need to upgrade.
Alternatively, or in combination, a maxblocksize increase through a system wide upgrade is back on the table as, in a surprising move, F2Pool signalled support for 8MB, a number all major miners agreed to last year, but failed to implement.
An increase of maxblocksize may be further supported by Jihan Wu, founder of Bitmain which, in combination with F2pool, controls almost half of the Bitcoin network. Jihan Wu has recently been very vocal and publicly stated:
“Block should not be too full to stop people using Bitcoin with good user experience.”
However, they do not seem to be proposing any action until, at least, next month, due to seemingly being bound by an agreement which states:
“We will only run Bitcoin Core-compatible consensus systems, eventually containing both SegWit and the hard-fork, in production, for the foreseeable future.”
Few, therefore, hold any hope that this situation will be resolved any time soon after almost a year of seemingly never ending debate, but the reaction of Bitcoin’s price now that the hash induced boost to transaction capacity has subsided will be closely watched.
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