Bitcoin, the cryptocurrency that made the blockchain concept
famous, was designed a decade ago. At the outset, it counted a few dozen users.
While the total number of Bitcoin users today is difficult
to quantify, it is probably at least one million and could be many times that
The dramatic increase in the size of the Bitcoin user base over
the past decade means that the Bitcoin blockchain now has to accommodate many
more participants, and a much higher number of transactions, than it did in its
Scaling up to meet this challenge has proven difficult because the
original Bitcoin design imposes constraints on the number of transactions that
can be processed quickly. This limitation results primarily from Bitcoin’s
limited block size. The size of a Bitcoin block (which refers to the unit of
transactions that, when combined, comprise the distributed ledger that forms
the Bitcoin blockchain) is limited to one megabyte. This is not enough space to
support the hundreds of transactions that users currently request every minute.
As a result, Bitcoin transactions take a very long time — hours or even days in
some cases — to be processed.
This problem will only worsen as the size of the Bitcoin
blockchain increases. The original Bitcoin design does not include a way to
address this scaling problem.
An Alternative Blockchain or SegWit
For Bitcoin users, there are two main ways to solve the Bitcoin
The first is straightforward: they can migrate to a different type
of blockchain, such as Ethereum. While Ethereum has scaling
issues of its own, those promise to be easier to address without modifying the core
design of the platform. Strategies like “parallel transaction processing” and “sharding”
could help Ethereum to scale up.
In addition, for the time being, the scaling issues in the
Ethereum community are not as serious because Ethereum’s user base is almost
than Bitcoin’s. Transaction rates on the Ethereum blockchain are not yet
becoming unacceptably slow.
The other scaling solution that has gained traction in the Bitcoin
community is called “Segregated Witness,” or “SegWit.” Originally conceived as
a way to solve reliability issues related to Bitcoin transactions, SegWit could
also help to solve Bitcoin’s scaling problem. It would do that by removing
signature data from each Bitcoin transaction and using the freed space to
increase the size of Bitcoin blocks.
Under the SegWit proposal, which is expected to lock in at any
moment, block sizes would reach a theoretical maximum of four megabytes,
although in practice most blocks would likely be closer to two megabytes.
Either way, SegWit would at least double the rate at which Bitcoin can support
The caveat is that SegWit would require the use of “sidechains”
like the Lightning Network.
Sidechains process transactions independently of the blockchain. They greatly
increase the speed of transactions, but they require off-blockchain
transactions to be handled by third parties in a centralized location, rather
than processing them on the decentralized blockchain.
The SegWit solution has gained only limited support. Opponents
raise two main arguments against it. The first is that increasing the Bitcoin
block size by a fixed amount won’t solve the scaling problem definitively.
Eventually, if Bitcoin grows large enough, even the larger block sizes made
available by SegWit will not be sufficient to support fast transactions.
The second argument against SegWit is that requiring sidechains
would destroy the decentralized and anonymous nature of the blockchain.
Challenges for Media Blockchains
The debate over whether and how to solve Bitcoin’s scaling problem
impacts the future of media blockchains in a unique way.
It means that media companies that have built their platforms on
Bitcoin, like Ascribe, need to
make a choice: they can accept Bitcoin in its current state and the slow
transactions that come with it, help sway the community toward a solution like
SegWit or move to an alternative blockchain altogether.
Other media blockchain companies will have to make similar
decisions, sooner or later. Platforms such as Mycelium, which are built on Ethereum rather than
Bitcoin, don’t face as much immediate pressure on the scaling front as do those
based on Bitcoin. As noted above, however, Ethereum is not immune to scaling
issues. If Ethereum grows large enough, and innovations are not introduced to
allow it to scale, its transaction rates could also slow.
Beyond increasing the ability of the underlying blockchain
technologies to scale, media blockchain companies can adopt other strategies to
help mitigate the effects of blockchain scaling issues. One solution is to
adopt sidechains, whether or not the blockchain strictly requires it. As noted
above, sidechains can dramatically speed transaction rates, in exchange for the
tradeoff of having to pass transactions through a centralized hub run by a
It’s also possible to conceive business models for blockchain
media platforms that don’t depend on fast transactions. In general, this would
mean sacrificing real-time results for blockchain transactions. That may not be
ideal, but it is more feasible for a media company that processes ownership of
digital content to accept delays in transactions than it is for a
blockchain-based payment system. In the latter case, immediate, real-time
results are a priority; this is not always true in the media world.
Scaling is a real challenge for Bitcoin and other blockchains, and
it remains unclear whether that is truly solvable. Media blockchain companies
are not likely to be as adversely affected in the short-term by scaling
limitations as are other types of blockchain platforms, but they should develop
strategies for addressing scaling issues in order to ensure that scaling
constraints in the blockchains they use don’t undercut the ability of their
platforms to grow or to process transactions within the timeframe that their