Adam Back, president of Blockstream, outlined his approach to Bitcoin's capacity problem at a recent talk in Prague's Paralelni Polis. The roadmap tracks with what Bitcoin Core contributor Greg Maxwel
Adam Back, president of Blockstream, outlined his approach to Bitcoin's capacity problem at a recent talk in Prague's Paralelni Polis. The roadmap tracks with what Bitcoin Core contributor Greg Maxwell, now Blockstream's CTO, proposed on the Bitcoin development mailing list. If adopted, Back's plan would double Bitcoin's on-chain transaction capacity year over year for three years running. Layer-2 systems like the Lightning Network could develop in parallel, with creators claiming these could handle millions or billions of transactions per second.
Back organized his proposal around four main upgrades. Segregated Witness comes first. This change lifts the effective block size to roughly 1.7 MB, a 70 percent increase from today's limit. The upgrade also enables further improvements like the Lightning Network and schnorr signatures, unlocking new protocol capabilities. Wallet operators and payment processors see clearest benefits from updating. Those who deploy the new address format access greater capacity while maintaining backward compatibility with older systems. Nodes that haven't updated can still process transactions from those that have. Back explained the incentive during his presentation: "It provides scale to those people who opt-in, so if I'm running a payment processor and I upgrade the library that I'm using and move to the new types of addresses, which are backwards compatible, then I get cheaper transactions or access to more scale." Users who decline to upgrade gain something too—SegWit adopters consume less block space, leaving room for legacy transactions to fill unused slots. A pull request for Segregated Witness in Bitcoin Core has gone live and faces rigorous code review and testing. Before any merge, the community will scrutinize the implementation.
Second comes a shift in Bitcoin's signature algorithm from ECDSA to schnorr signatures. This technical change compresses the size of each transaction. Smaller transactions mean each block holds more of them, without any block size change required. The efficiency stems from how schnorr signatures work compared to the current approach. Back said: "We can make the transactions smaller. From the same block size, we can get more transactions if we use this different type of signature." Paired with SegWit, schnorr signatures would yield throughput matching a 3 to 4 MB block, using existing limits. The combination creates meaningful gains without pushing protocol boundaries. Back reckons the work could wrap up within 2016. He expressed confidence about unknowns, saying: "This is relatively close technology. There are not too many unknowns about how to do this." This assessment matters because it suggests development could accelerate past proposals with greater technical risk.
Third comes addressing block propagation bottlenecks. Invertible Bloom Lookup Tables (IBLT) and Weak Blocks tackle this problem. Neither alters Bitcoin's consensus rules, so neither requires forking—a substantial advantage. Propagation delays matter because they incentivize orphaned blocks. When a miner finds a new block, every other node must receive it without delay. Slow propagation means miners might build on old chains without knowing better alternatives exist. The longer a block takes to spread, the greater the chance someone else finds another block in that window, wasting the first miner's work. "The network actually has excess bandwidth," Back noted, implying transmission capacity goes unused. IBLT and Weak Blocks spread block data over time instead of sending it all at once, reducing seconds before full nodes receive block information. The key insight is that all data doesn't need to arrive at once—spreading transmission out helps information reach nodes faster than bundling does. Rusty Russell of Blockstream and Kalle Rosenbaum of Popeller presented technical specifications for both improvements at Scaling Bitcoin Hong Kong. The audience learned implementation approaches for each. Reduced propagation delays let operators increase block sizes in safety, without escalating orphan risk. This solves a critical bottleneck that constrains how far block sizes can grow without harming network stability.
The fourth and final step is a hard fork to raise the block size limit. This path has fractured the developer community. Bitcoin XT and Bitcoin Classic both champion hard fork routes to expand capacity. Larger blocks accommodate more transactions. Back declined to commit to specific numbers. "Another potential is a kind of flexible size, so a block size that can grow over time automatically—maybe reacting to demand in some way," he said, leaving open adaptive solutions beyond fixed increases. The distinction matters—a static increase handles growth for a time, while dynamic adjustment could adapt to shifting patterns. Back's openness suggests multiple pathways could emerge.
These base-layer improvements proceed while layer-2 work happens in parallel. The Lightning Network requires minimal prerequisites before functioning on Bitcoin. It needs CHECKSEQUENCEVERIFY (and two companion proposals) plus Segregated Witness adoption. Four or five companies are coding Lightning implementations, including Blockstream and Lightning. Development happens on GitHub and through a dedicated mailing list. Many have called Lightning transactions off-chain, but Back took time to clarify what that means: "It's important to point out that Lightning Network transactions are real, native Bitcoin transactions. Each and every Lightning transaction could be posted to the Bitcoin blockchain and is a valid transaction; it's just that there is a caching mechanism that collapses them, so they don't all need to be sent to the blockchain." Lightning doesn't work off-chain in the sense of being separate from Bitcoin. Instead, it batches settlements on Bitcoin. The design enables payments that settle in moments with fees near zero, creating room for Bitcoin micropayments that were economically unviable before. The system unlocks possibilities for fast, tiny transactions without expensive charges.
