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Bitcoin’s backlog of transactions once again spiked as usage has returned while developers debate reducing the block size.
Bitcoin’s transaction volume has recovered significantly after it fell from a December 2017 high of about 490,000 to an April 2018 low of about 134,000, returning to the 350,000 range at the beginning of the week. This prompted a spike in the mempool of backlogged transactions, increasing as high as 40,000 pending transactions, a number not reached since mid-November, as block space demand at current fee levels outweighed supply.
Meanwhile, debate regarding the block size has once again resurfaced as Bitcoin Core developer Luke Dashjr has begun working on a block size reduction, effectively reducing two thirds of present block capacity.
Bitcoin’s original premise and structure is rapidly shifting
It sounds like non-Bitcoiners are all for Bitcoin supporters to lower the block size and risk blowing themselves up to force people onto LN ASAP. Will be an interesting situation if it happens.
— Brian Hoffman 🙅🏼♂️ (@brianchoffman) February 13, 2019
The return to a congested on-chain Bitcoin, as well as considerations of a reduced block size, represent a shift from Bitcoin’s original workings to a very different model. For the majority of its history, Bitcoin’s primary use came from on-chain, publicly viewable transactions with low fees and relatively rapid permanent settlement, with users maintaining full control over their private keys and liquidity and sending and receiving through either full-node wallets or light SPV clients. Now, Bitcoin seems to be moving instead to a model of off-chain transactions, where on-chain transactions rarely represent regular payments or transfers, except perhaps for significant quantities, but instead are routine settlements of economic activity taking place off-chain through always-on lightning nodes and channels, with final balances occasionally settled on-chain.
The splintered battle for Bitcoin’s original vision
Since the change in Bitcoin’s prospects and vision, the desire for its original vision of peer-to-peer electronic cash transacted on a public transparent ledger through low-fee on-chain transactions has been represented in several projects. Dash was the first of these, pursuing a vision of on-chain scalable digital cash since 2014, pursuing Bitcoin’s original model plus the addition of additional features built on top such as a masternode network, governance, enhanced privacy, and instant transactions. Bitcoin Cash joined in late 2017 similarly following the original Bitcoin model while adding some innovations to consensus and instant transaction security. Finally, Bitcoin SV split off from Bitcoin Cash in late 2018, implementing a similar though stripped-down design with an emphasis on immediate and significant scaling.