Bitcoin scalability conversations often invoke Visa's 150 million daily transactions as a benchmark. Reaching that volume would be ambitious enough for a blockchain network. Bitcoin, though, will need
Bitcoin scalability conversations often invoke Visa's 150 million daily transactions as a benchmark. Reaching that volume would be ambitious enough for a blockchain network. Bitcoin, though, will need to handle far more if it's going to fulfill its broader promise. The gap widens because Bitcoin enables transaction types that don't exist in traditional finance.
Content micropayments offer the clearest example. Bitcoin advocates see this as a way to disrupt the advertising and subscription model that dominates online publishing. Readers would pay small amounts for individual articles instead of viewing ads or purchasing subscriptions. Viewers could pay for videos. Podcasts and other content could shift to per-transaction pricing.
A billion internet users making five or ten micropayments each day would generate ten times Visa's current transaction volume from content payments alone. That's the scale we're talking about.
Machine-to-machine payments represent another class of transactions. Self-driving cars could pay each other for road position. Computers could trade processing power. Devices could rent storage and bandwidth in real time from each other. Some developers envision Bitcoin powering mesh networks where nodes receive payments for routing traffic. A laptop with spare hard drive space could sell access to fund a smartphone's network connection. The devices would negotiate and execute these transactions without human intervention. A laptop, tablet, smartphone, or any connected device could buy and sell system resources on its own. If this use case became popular, it would add millions more transactions to Bitcoin on a daily basis.
Beyond payments, the blockchain has additional uses that must be factored in. Developers experiment with colored coins to issue stocks and other assets. Property owners could register homes and cars on the ledger. Someone already registered a marriage as a Bitcoin transaction. New blockchain use cases emerge regularly from developers and entrepreneurs. The total transaction volume these applications could generate remains unknowable.
Not all of this needs to happen on-chain. Most Bitcoin transactions today run through centralized exchanges. Off-blockchain services like ChangeTip and Circle process payments in centralized ways. But emerging solutions like Open Transactions and the Lightning Network could change that dynamic. Open Transactions stays off-chain entirely. The Lightning Network, while technically an on-blockchain solution, manages some transactions off-chain.
The Scaling Bitcoin workshop in Hong Kong will examine various scalability proposals that have been developed over the years. What's clear is that Bitcoin extends far beyond PayPal-style transfers. That reality makes the scaling picture bleaker than originally thought.
