Vitalik Buterin Emphasizes The Need For Bitcoin To Adopt Layer-2 Solutions
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The discussion was moderated by Udi Wertheimer, a Bitcoin activist and well-known internet figure who, along with Eric Wall, another Bitcoin advocate, and Vitalik Buterin, has pushed the idea that Bitcoin must achieve more than scalability to serve as more than a payment solution. The scope of the conversation was to talk about how Bitcoin can overcome its status as a mere payment network and means of exchange and develop other capabilities in a way similar to what Ethereum has done so far.
Ethereum's scaling techniques that should inspire Bitcoin
The more transactions conducted on the widely-known Ethereum, the slower its processing speed becomes and the more complicated it is for the network to process further operations. Transactions could be processed quicker, which is where scalability solutions have come into play. According to Buterin, the already-implemented Ethereum solutions described below improved the network and may also help boost Bitcoin's capabilities.
Moreover, Ethereum's co-founder emphasizes Arbitrum and Optimism as important "rollups" that should serve as the groundwork for developers in their research, emphasizing that similar scaling solutions could solve Bitcoin's scalability problems and boost its overall functionality.
The shared traits between Ethereum and Bitcoin
Finding common ground between the two blockchains can be challenging. The differences between Ethereum and Bitcoin need no introduction, nor are they unfamiliar to most cryptocurrency advocates. As such, bringing to light the shared characteristics between the two was the right way to give insight into how Bitcoin could follow in Ethereum's footsteps. Vitalik Buterin talked about the commonalities between the two blockchains, from which he concludes that the following three are among the main resemblances between Bitcoin and Ethereum:
Bitcoin's scaling challenges
Scalability is among the most pressing problems, making it the talk of the town ever since the first digital coin broke into the market. With increased adoption and widespread usage, it's unsurprising that the problem of networks reaching a specific capacity limitation would become more and more significant. Bitcoin has a limited transaction processing capacity which decreases its efficiency, especially as the network is constantly used. The network's problems today stem from its growing popularity and number of transactions. It can only handle between seven to ten transactions per second (tps), unlike traditional payment systems such as Visa, which can process thousands of tps.
The obstacles are brought about by the network's design, where a block takes around ten minutes to be created and has a block size capacity of 1MB. Therefore, participants must deal with higher transaction fees and slower processing times when activity peaks.
Solving the Bitcoin scalability issue is not something developers can do overnight; it is an endeavor that takes time and perseverance. The network must strike a balance between the three characteristics that a well-performing blockchain platform needs: scalability, security, and decentralization. This challenge is known as the "scalability trilemma" – a term created by Vitalik Buterin initially and expanded to Bitcoin as the need to make the network more scalable grew more pressing.
The need for scaling solutions
Bitcoin's scaling problems call for effective developments, such as second-layer solutions and off-chain protocols. The Lighting Network, a second layer implemented in Bitcoin's blockchain, speeds up and reduces the cost of transactions through off-chain channels. Thanks to the improved scalability, users can set up payment channels and make transactions off-chain quickly and cost-effectively.
Additionally, sidechains and drive chains represent off-chain protocols that enable extra opportunities to boost Bitcoin's scalability. For instance, they help develop additional blockchain networks that, together with the main ledger, can facilitate the creation of different decentralized apps and smart contracts without straining the main network.
There are opposite stances on the previously made statements
Just like in every dispute and regardless of the topic, participants can't all support a single theory and opinions are often split. With regards to Bitcoin's evolution, the positions of Buterin, Wall, and Wertheimer draw criticism from Bitcoin fundamentalists who claim that the adoption of smart contracts and non-fungible tokens will distort the network's initial purpose as a P2P cash network.
Final Touch
Bitcoin must sustain several transformations to overserve and succeed in becoming a high-performing blockchain platform. As Vitalik Buterin suggests, overcoming Bitcoin's scalability challenges requires collaborative work from all participants in the crypto community, from researchers to developers.
Having open discussions, sharing ideas, experimenting, and conducting research pave the way to finding the right solutions and implementing them properly. All these sustained efforts will only result in an improved Bitcoin ecosystem that can overcome innovation barriers and set the stage for a versatile and scalable blockchain network.