In the midst of the bull run of 2017, it soon became apparent that there was a big issue. Major cryptocurrencies were struggling to deal with the vast amount of transactions being processed, and fees began to skyrocket as it became evident that many cryptocurrencies had not managed to resolve their scaling issues. On top of this, many exchanges, even some of the biggest, were practically DDoS’d as their servers couldn’t handle the traffic coming in.
Different scaling solutions
The fact of the matter is that 2017 highlighted that cryptocurrencies were not ready for the mainstream. Solutions to scaling cryptocurrencies were debated before the bull run occurred, but even more so after. Bitcoin is attempting to scale through their layer 2 Lightning solution. Of course, Bitcoin Cash split off from the original Bitcoin chain because they believe that increasing the block size can solve the scaling solution. Ethereum has taken a different approach and hope to move to Proof of Stake instead of Proof of Work.
All of this has created more debate and tension in the cryptocurrency community. The reason being is that scaling is extremely important for the success of each cryptocurrency. To succeed, they all must be able to scale. There are already some cryptocurrencies that can handle large volumes of transactions, but these tend to be centralised and not much better than the traditional financial system in place.
Each side believes their way is the best way, and whilst sometimes the debate may appear crude or childish, in some cases, for the most part, the debates are very important. The criticism of each other and sharing of ideas is the only way that they will continue to keep each other on their toes and improve.
A different type of scaling
Exchanges haven’t been immune to these issues either. Certain exchanges have been extremely slow in incorporating the SegWit upgrade on Bitcoin to lower transaction fees. More than this though, the bear market has been a blessing in disguise for them. The reduction in traffic has meant that these exchanges can upgrade their servers and systems to ensure that if traffic does increase, they will not have to delay sign ups or suffer from outage.
Whilst the scaling solutions for exchanges are very different to cryptocurrencies – rather than summoning new ideas, they just need to increase their capacity to handle traffic – it does show how the whole space was ill prepared for 2017. The events didn’t paint cryptocurrencies in a particularly good light. Rather than fast and cheap international transactions, they were slow and expensive. Rather than a community striving for improvement, newcomers were welcomed to deep-seated division.
With the lessons of 2017 well and truly learned, let us hope that such solutions are in place and everyone is prepared next time.