Ethereum

Future

Bitcoin

<p class="is-style-lead">Bitcoin’s ecosystem is changing due to new tech and high fees, demanding scalability solutions. Recent findings from Binance stress the pressing need to tackle Bitcoin’s scalability challenges.</p>
<p>Bitcoin’s ecosystem is changing because of new technologies and rising transaction fees. It is getting clearer that Bitcoin has a scalability issue. Innovations in the ecosystem, highlighted in a recent report from Binance, reveal an urgent need to address Bitcoin’s (<a href="https://crypto.news/price/bitcoin/" data-type="link" data-id="https://crypto.news/price/bitcoin/" target="_blank" rel="noopener noreferrer nofollow">BTC</a>) scalability issues.</p>
<h3 class="wp-block-heading" id="strong-btc-scalability-compared-to-ethereum-strong"><strong>BTC scalability compared to Ethereum</strong></h3>
<p>Ethereum (<a href="https://crypto.news/tag/ethereum/" target="_blank" data-type="link" data-id="https://crypto.news/tag/ethereum/" rel="noopener noreferrer nofollow">ETH</a>) is valued at $450 billion, with $45 billion in total value locked (TVL) across its Layer-2 (L2) solutions, representing about 10% of its total value, per the report.</p>
<p>In contrast, Bitcoin, with a market cap of $1.4 trillion, only has $2 billion in L2 TVL, just 0.13% of its total value.&nbsp;</p>
<p>This highlights how Bitcoin needs to catch up in adopting effective <a href="https://crypto.news/tag/layer-2/" data-type="link" data-id="https://crypto.news/tag/layer-2/" rel="noopener noreferrer nofollow">Layer 2</a> solutions, which is crucial for enhancing its scalability. Addressing these scalability issues is urgent to ensure Bitcoin’s continued growth and usability in the face of increasing transaction volumes.</p>
<p>Projects like Ordinals, Inscriptions, BRC-20 tokens, and <a href="https://crypto.news/bitcoin-runes-activity-drops-significantly-weeks-after-generating-135m-in-fees/" target="_blank" data-type="link" data-id="https://crypto.news/bitcoin-runes-activity-drops-significantly-weeks-after-generating-135m-in-fees/" rel="noopener noreferrer nofollow">Runes</a> show demand for these features. As a result, the average <a href="https://crypto.news/bitcoin-miners-revenue-drops-amid-declining-transaction-fees/" target="_blank" data-type="link" data-id="https://crypto.news/bitcoin-miners-revenue-drops-amid-declining-transaction-fees/" rel="noopener noreferrer nofollow">transaction fees for BTC</a> have increased from $1.5 in 2022 to $9.5 in 2024, indicating the network’s increased usage and limitations.</p>
<h3 class="wp-block-heading" id="strong-binance-s-considerations-for-bitcoin-s-scalability-strong"><strong>Binance’s considerations for Bitcoin’s scalability</strong></h3>
<p>According to the report, helping and fixing Bitcoin’s <a href="https://crypto.news/solana-passed-scalability-test-despite-outages-analyst-says/" target="_blank" data-type="link" data-id="https://crypto.news/solana-passed-scalability-test-despite-outages-analyst-says/" rel="noopener noreferrer nofollow">scalability solutions</a> involves addressing several things, such as trustless two-way bridges, which should ensure seamless and secure asset transfer between layers without intermediaries.&nbsp;&nbsp;</p>
<p>“Due to the limited smart contract functionality of Bitcoin, a trustless two-way bridge has not been possible. This means that some form of centralization is typically required to move assets from Bitcoin to the L2 and back,” the report stated.&nbsp;</p>
<p>In the world of Bitcoin, a two-way bridge is like a superhighway that lets you move your stuff between the main Bitcoin system and a Layer 2 solution without needing an intermediary.&nbsp;</p>
<p>Determining if a solution necessitates a blockchain fork and balancing interests between users, developers, and newcomers are crucial considerations for improving Bitcoin scalability. This will help maintain coherence with Bitcoin’s core principles and infrastructure.&nbsp;</p>
<p>“This means that the viability of Bitcoin scalability projects, which are relying on a fork, is relatively limited in the short term,” the report read.&nbsp;</p>
<h3 class="wp-block-heading" id="strong-emerging-solutions-and-technologies-strong"><strong>Emerging solutions and technologies</strong></h3>
<p>According to the report, recent developments in the Bitcoin ecosystem, such as <a href="https://crypto.news/bitcoins-taproot-wizards-secures-7-5m-funding-from-standard-crypto/" target="_blank" data-type="link" data-id="https://crypto.news/bitcoins-taproot-wizards-secures-7-5m-funding-from-standard-crypto/" rel="noopener noreferrer nofollow">Taproot</a> and BitVM, have opened up new possibilities for Bitcoin protocols. These advancements are still in the early stages, but they are laying the groundwork for Bitcoin to improve scalability.&nbsp;</p>
<p>The report highlighted Bitcoin-native projects like the Lightning Network and RGB as leading the way in enhancing peer-to-peer transactions and other solutions, such as sidechains and Ethereum Virtual Machine (EVM) Layer-1s that utilize bridged Bitcoin as a staked asset but may involve centralized components.&nbsp;</p>
<h2 class="wp-block-heading" id="future-of-bitcoin-scalability">Future of Bitcoin scalability&nbsp;</h2>
<p>As Bitcoin’s transaction fees rise and its mempool becomes more congested, the importance of Bitcoin’s L2 solutions grows. Projects like the <a href="https://crypto.news/coinbase-integrates-bitcoin-lightning-network/" target="_blank" data-type="link" data-id="https://crypto.news/coinbase-integrates-bitcoin-lightning-network/" rel="noopener noreferrer nofollow">Lightning Network</a> represent a great start but still have user experience and functionality limitations.&nbsp;</p>
<p>The Bitcoin scalability landscape is poised for significant development in the coming months, with various solutions aiming to address its growing scalability challenges.</p>

Binance: Bitcoin has a scalability issue, but there’s hope in solutions

Table of Contents

crypto.news

Other articles published on May 30, 2024

Crypto Market Price Analysis Today: Bitcoin (BTC), GameStop (GSTOP), Notcoin (NOT), Jupiter (JUP)...

Could JasmyCoin Power Japan’s ‘My Number’ Card on iPhones?

AVAX enters a slump: Will $36.9 break or make its market?

El Salvador Promotes Bitcoin Adoption and Collaborates with Crypto Firms

BlackRock Bitcoin ETF racing ahead? Flips GBTC with a $20B high!

Will Qubetics Whitelist Surpass Crypto Leaders Bitcoin and Ethereum?

Join our free newsletter for daily crypto updates!