A study led by Cornell professor Emin Gün Sirer entitled “Decentralization in Bitcoin and Ethereum” claimed that the bitcoin block size could be increased to 1.7MB and still maintain the same level of decentralization.
Two Year Research Results
During a research initiative conducted to compare the level of decentralization on Bitcoin and Ethereum, Cornell researchers led by Sirer discovered that bitcoin is “under-utilizing” its network. The research paper stated that because nodes on the Bitcoin network have a larger bandwidth than nodes on the Ethereum network, the size of bitcoin blocks can be increased without impacting the synchronization of nodes. Sirer explained that,
“Bitcoin nodes generally have higher bandwidth allocated to them than Ethereum. Compared to our previous study in 2016, we see that the median bandwidth for a Bitcoin node has increased by a factor of 1.7x. The typical Bitcoin node has much more bandwidth available to it than it did before. Higher allocated bandwidth indicates that the maximum block size can be increased without impacting orphan rates, which in turn affect decentralization.”
Expanding the bitcoin block size would increase the transaction capacity of the Bitcoin network by almost two-fold. Currently, as shown by the large size of the bitcoin mempool, the holding area of unconfirmed transactions, the Bitcoin network is congested, leading to high transaction fees and longer transaction verification periods.
According to Blockchain, the second most widely utilized cryptocurrency wallet behind Coinbase, the size of the bitcoin mempool remains above 120 million bytes, with just over 300,000 transactions per day. Last month, the Bitcoin network was handling around 450,000 transactions per second, and the size of the bitcoin mempool remained in the same region, in the range of 120 to 130 million bytes.
Given the congestion on the Bitcoin network, and the fact that it costs approximately $10 to process bitcoin transactions on non-SegWit wallet platforms and nearly $5 on SegWit-enabled wallet platforms, some urgent scaling solutions are needed to relieve the Bitcoin network of congestion in the short-term.
Sirer noted that an immediate block size increase or on-chain scaling would not drastically impact CPU and disk requirements, considering that the cost for CPU and disk space has declined significantly over the past few years.
“Some people argue that increasing the maximum block size would also prohibitively increase CPU and disk requirements. Yet these costs were trivial in the first place, especially compared to today’s transaction fees, and have come down drastically. For instance, a 1TB disk cost $85 on average in 2016 and $70 in 2017.”
In addition to on-chain scaling, the adoption of SegWit and transaction batching by major exchanges and wallet platforms would also reduce the congestion on the Bitcoin network for the short-term. Cryptocurrency hardware wallet manufacturer Ledger noted that the integration of SegWit can reduce transaction fees by 40 percent.
The implementation of SegWit along with transaction batching by all bitcoin wallet platforms and exchanges in the industry could lead to a drastic change in the scalability and transaction capacity of the Bitcoin network. But, if the adoption of SegWit and transaction batching is stalled, then an on-chain scaling solution would be necessary to decrease the transaction fees of bitcoin and increase the network’s transaction capacity.