Why BCH scaling on-chain makes sense
As the cryptocurrency space continues to mature, there are debates being held on a daily bases regarding how best to manage the ecosystems and the individual underlying components. A huge debate has sprung up regarding scaling, with some arguing in favor of off-chain scaling and others standing fast on the merits of scaling on-chain. Upon dissecting on-chain scaling, it isn’t difficult to comprehend why this is a better option.
On-chain scaling, such as that seen when Bitcoin Cash (BCH) forked from Bitcoin (BTC) last year, increased the blockchain’s block size substantially, facilitating more transactions directly on the blockchain. BCH enabled a block size of 8 megabytes (MB) immediately with the hard fork, and then improved the size even more with a subsequent hard fork that saw it increase to 32 MB in May. The benefit is a fluid transactional process that ensures consistency and efficiency as more and more transactions are added to the chain. Ultimately, this equates to extremely low fees, making it an ideal retail solution and keeping it in line with the original Satoshi Vision of digital currency.
Comparatively speaking, the BTC core network is still limited to 1MB per block, severely hampering its ability to handle large amounts of transactions. The result is a network that is slower and typically incurs higher transaction fees than BCH.
In order to overcome the impediments to a fast network, BTC developers came up with the Lightning Network (LN), which provides off-chain scaling for BTC transactions. Put simply, the initial and final transactions are executed on the BTC blockchain, but the intermediary transactions are moved off-chain. This requires that the sender, the receiver and the intermediary be online at the same time, and ties up a huge chunk of BTC until after the transaction is settled.
The only thing the use of the LN has accomplished is the shifting of certain transactions off the chain; it hasn’t improved speed or enhanced the network to be more efficient. In fact, even after six months of being stalled in beta testing, the LN has been proven to still not function properly.
A paper (in pdf) by Dr. Craig Wright last November that is even more valid today given the on-chain/off-chain debate, the cryptocurrency expert discussed the importance of expanding in scale to meet the demands of increased crypto adoption, and how on-chain scaling was computationally possible without impacting the network.
Through a series of tests and simulations, Dr. Wright and his team were able to successfully demonstrate how on-chain scaling of up to petaflops of data could easily be met by technological advances while not having any effect on the blockchain’s operations or integrity. He also showed that even the current hardware limitations are adequate to meet demand, even ten years into the future. One simulation proved that it would be possible to scale a blockchain protocol capable of supporting a 300-gigabyte (GB) block, allowing, again, for continuity on the network.
An excerpt from the paper reads, “Since Bitcoin’s main value proposition is security and decentralization which is achieved through the Proof of Work game, the optimal solution to the scaling debate may in fact come through continuous improvements in hardware technology rather than software.
“Bitcoin is a very simple system in principle. It is an accounting ledger with inputs and outputs. Users don’t demand new fancy features, they simply demand security. This is why every system proposing to be “the next Bitcoin” has failed. Competitors to Bitcoin propose and tout new features when Bitcoin doesn’t compete on software features. Interestingly, Bitcoin doesn’t directly incentivize developers at all to improve the software but aggressively incentivizes miners to improve their hardware.”
When Satoshi Nakamoto first conceived cryptocurrency, he postulated that a scalable digital currency network was not only doable, but was more efficient and could help to counter possible attacks on the network without anything more than the natural progressive upgrades to computer hardware. These assertions were confirmed with the research led by Dr. Wright. Ultimately, this begs a question. Why, then, would BTC need to break away from what Satoshi had originally intended and create a network that doesn’t fit his design, if that design was shown to be the most effective solution?
Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.
Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.