Non-cash global transactions amount to about 522 billion and are increasing in a big way, growing by 9.1% between 2015 and 2016 alone. For Bitcoin blockchain to dominate that enormous number of transactions in the future, it will need to scale massively. But just by how much?
The number of transactions corresponds to 9,722,220 transactions every 10 minutes, the same duration for publishing blocks on the Bitcoin blockchain, according to an opinion piece by Software Engineer and Computer Science and Business student at the University of Waterloo and Wilfrid Laurier University Subhan Nadeem.
It means every block would hold 2.4 gigabytes of data at today’s size of 250 bytes. So Bitcoin would see 350 gigabytes on its blockchain every day and 127 terabytes every year. It currently produces 50GB of data every year.
Validating a single block and propagating it to other nodes in the network consumes 1.25 gigabytes of memory and takes approximately thirty seconds according to an analysis. Nodes validate and propagate 1-megabyte blocks to other nodes around the world. An eight-megabyte block would take about 150 minutes to validate.
Assuming validation time and memory consumption scale only linearly in future. Since to validate the newly projected monster blocks. However, we would need over 51,000 minutes per block or approximately 35.4 days for a miner running at today’s consumer-grade hardware. Therefore, to validate a block that would hold about 2.4 gigabytes of data.
Only the HP Z8, which will cost $10,000 on release, would come close to managing that work. Also, with the cost of data storage, the operator of the machine that handles all that amount of data. However, from the blockchain would need to spend $2,413 per year on storage costs due to blockchain growth. Currently, a user would pay $0.95 in yearly costs for the 50GB of data increase every year.
With the current node distribution, a node would need to manage a bandwidth of 691 GB every day or 20.73 terabytes per month if it downloads a block every 10 minutes and uploads the recommended 144 blocks per day. That comes to about $600/month (at least) for bandwidth costs in the United States using this calculator if the machine owner would route blocks through a CDN operator (no consumer grade network provides that level of bandwidth today).
In other words, if the numbers go that high, there is a higher risk that mining centralization will occur. It also means the security and proper functioning of the network would be left in the hands of large corporations. The two would be avoided only if the scaling of the blockchain is matched by an improvement in block technology, for instance, a technology that makes Bitcoin scale without increasing block size.
Another change that will certainly occur is the reduction of costs, including bandwidth and storage costs.
For the Bitcoin blockchain to scale fast enough to reach billions very quickly. There would need to be a very fast reduction in bandwidth. Besides storage costs for many people to manage the costs. Also, the cost of machines would need to drop very fast. The machine technology itself would need to improve to see the network handle. Thus that huge amount of data and transactions without hitches and security breaches.
There is no doubt that appropriate systems will need time to develop and it will take time.
Also Read: BnkToTheFuture to launch a platform to help investors’ trade crypto equity
Daniel Jeffries, author, futurist, and thinker calls blockchain the “first successful implementation of decentralized consensus mechanisms” and says we are just beginning to see new types such as IOTA’s Tangle and HashGraph that could make things easier, faster, better and less costly in future.
He predicts that hundreds of experimental protocols will come up in the next twenty years. Besides these will push up transaction levels even beyond Visa’s processing capability. Although augments by artificial intelligence systems.
The rise of AI and the entry of quantum computers I wrote about a few months ago show that things will have changed a lot in the next 20 years in terms of wallets, underlying blockchain tech and may be forced improvement on almost everything that’s crypto today.