One of the most spoken buzzwords in the cryptocurrency space is “scaling.” Everyone cares about which coin can grow to significant levels, how the infrastructure will work, how it will impact centralization, etc. At present, however, scaling doesn’t matter much at all. Yes, even though certain projects have faced major issues and drama surrounding the limit in network capacity, for the most part increasing a network’s ability to easily handle much higher traffic loads is still a novelty at this point.
Few chains experience serious traffic right now
At the moment, very few chains experience any meaningful level of traffic. With the exception of Ethereum and Bitcoin, no coin has had to field transaction loads of any significance. Scaling is only real for those chains, as most other coins have plenty of space left in their blocks. Even then, a temporary solution is to just jump over to another, less-used coin for more workable transactions before going back to one’s preferred coin. Even highly congested networks can simply offload extra traffic to the next coin down the list. So far there isn’t enough net use for that to become unworkable yet.
Speculative use isn’t as sensitive to scaling issues as commerce
Most cryptocurrency use at this point is involved in investment and speculative trading. This gives a whole different set of considerations for what a transaction experience should be like. Moving off and on exchanges or to long-term storage has a relatively high threshold for transactional friction: as long as it goes through within a day and doesn’t cost more than a few dollars, there is no major issue. If a network becomes too congested to get anything through, most speculative users can just wait a few days until things clear up. A wildly inconsistent experience is no issue for traders. Commercial applications, meanwhile, are much less forgiving. Transactions need to be very fast (as close to instant as possible), cheap (a few cents), and above all consistent. The whole “try again later when there’s less traffic” approach spells death for regular business. Most of the scaling debates use the commercial use case, however the reality most coins end up dealing with is that of speculative use. Therefore, the lack of a smooth commercial experience largely doesn’t matter yet.
Scaling solutions can still be hype-based
In this speculative environment, even increases to transaction capacity are determined much more by the hype they generate than their network relief. If a project comes one step closer to implementing some fantastical solution that includes all the tech buzzwords of the day, no one cares if it works or not. If it sounds good, the coin pumps. The average user will have no way of differentiating experiences before and after implementing a supposed solution because, in most cases, the chain simply does not receive enough traffic for scaling to be needed in the first place, and in the cases where it is necessary use is sporadic enough to not be able to accurately measure a difference. The simple, practical, effective solution will always lose out to the convoluted, over-engineered, untested, yet over-hyped proposal. For the time being.
With heavy commercial use, the market will respond swiftly
The day is, however, coming when all this will be different. The speculative bubble surrounding digital currencies will pop, and investors and users will want to experience the practical use cases and potential that were the sources of their original speculation. When a large corporation goes from merely talking about using a technology or signing a strategic partnership to actually using it, whether or not it works will become instantly apparent. If it doesn’t scale, it will be dropped and will crash. Little patience will be had to simply wait around until an improvement can be unveiled, or integrate a whole new project in order to offload some traffic.
Right now, no one really needs to care about scaling. But when the day comes that networks face demand to field massive amounts of transactions cheaply, quickly, and consistently, those who cared and prepared all along will quickly rise to the top.
I think it matters. The fact that smart contract platforms can’t scale has led to slower uptake and scaling won’t come quickly for them. Perhaps for the currency coins this is true. Scaling through block size and hardware as dash plans to do is much easier than scaling smart contracts. Heavy commercial use won’t happen for them until they have already demonstrated the ability to scale. But for currency transactions scaling can be slower as more and more people slowly start using dash to buy their coffee etc (to use the oft quoted example)
Yes, absolutely. The point of all this is, it absolutely matters, but right now the markets can get away with pretending it doesn’t.