Bitcoin (BTC).’s current price is a bit volatile, but the most widely used cryptocurrency continues to draw interest from around the world. Recently, NCR, a US-based payment giant, and NYDIG, a digital asset management company, teamed up to allow around 24m US customers to buy and sell BTC. El Salvador will also be making the cryptocurrency legal tender in September.
While this is encouraging in terms of adoption, it raises the question: How much adoption and how much use can Bitcoin actually support?
A variety of Bitcoin experts claim that upgrades such as SegWit have increased the platform’s capabilities in recent years. Meanwhile, the maturation and use of the Lightning Network (LN), as a second-layer solution, theoretically allows Bitcoin to process an infinite number of transactions per second. Many observers agree that Bitcoin’s main issue right now isn’t throughput or capacity, but usability.
Bitcoin is growing by itself
Developer Luke Dashjr says that Bitcoin’s capabilities aren’t as limited than mainstream media would like you to believe.
Others agree with the assertion that Bitcoin’s capabilities have increased significantly since SegWit. Christian Decker, a Blockstream researcher, says that Bitcoin’s transaction volume has decreased while its capacity increases.
“It was a while ago that I made a direct comparison of pre-SegWit to post-SegWit. SegWit almost doubled the network’s capacity by optimizing the way information is stored in this back-of the-envelope calculation (minimal transactions), he stated.
Decker said that this scenario is too optimistic because it relies on the smallest transaction size. However, the upcoming upgrades — Schnorr signatures as well as Taproot — will make this scenario more realistic.
He said that Taproot and Schnorr could help us get closer to this optimistic scenario by compressing common scripts, and reducing the multisig transaction size to be identical to singlesig transactions.
Decker said that it is difficult to estimate the maximum transaction volume per second as it can vary based on the nature of transactions. Christopher Bendiksen (head of research at CoinShares) also agrees with this view. He adds that Bitcoin is already capable of serving many useful purposes.
Lightning Network comes to your rescue
Bitcoin can easily be adopted and used in a large number of countries. However, many agree that Bitcoin needs layer-two solutions to be able to become a national or international payment system that is used frequently by millions or thousands of people.
Bendiksen stated, “It is of course essential that on-chain transaction capacities keep getting optimised. But it is layered solutions which enable Bitcoin adoption at a global commercial scale. As we have just observed in El Salvador.”
El Salvador has turned to the Lightning Network in order to make widespread bitcoin payments in the Latin American country. With LN capable to a potentially endless number of transactions per second, LN can be used to enable LN to do almost anything.
Others are in agreement, but some point out that LN still faces technical hurdles.
The Lightning Network has unlimited transaction capacity. One limitation could be the need to open a payment channel, then manage the balance. But we already see emerging solutions like batch channel management, channel factories and so on,” Josef Tetek, Satoshi Labs’ brand ambassador for the Trezor wallet.
Critics suggest that the Lightning Network could lead to centralization payment channels. Many believe it is the only way that Bitcoin can significantly expand its capabilities. Christian Decker explains how.
Lightning can achieve greater scale by moving transactions off-chain but keeping off-chain contracts rooted on-chain and settled eventually. He explained that instead of being a limit for transfers, the blockspace limitation now acts as a limit to the number off-chain contracts that can be created and settled.
Scalability is not an issue; usability is
El Salvador was able, thanks to the Lightning Network, to move forward with its plans to legalize Bitcoin. However it remains to see how successful this adoption of the cryptocurrency.
Experts and commentators agree that the problem is not whether Bitcoin or the Lightning Network can handle a large number of transactions. It’s about usability. Expertise and experience are still required to use Bitcoin efficiently.
Luke Dashjr also agrees and emphasizes the importance of users operating their own nodes.
“Bitcoin works only with supermajority usage that is verified using the recipient’s full nodes. He stated that the greatest obstacle to adoption at present is usability. This includes users who are willing to verify their transactions.” he said Cryptonews.com.
A degree of centralization could be a result of the issue of usability.
“The worst case scenario is that Bitcoin newcomers will choose centralized custodial options (such as exchanges or their wallets) over centralized ones because they are simple to use. Josef Tetek stated that infrastructure developers have to make tools easy to use so people don’t fear using them.
Christopher Bendiksen affirms that Bitcoin’s scalability is not a problem and that there are other issues in the adoption area.