Lately, there have been issues with unconfirmed transactions in the Bitcoin world. One experience I had dealing with this problem was on February 29th as I waited three days for a large sum transaction to confirm. This is the longest I’ve had to wait for confirmation. However, quite a bit of the time since then, most of my transactions have taken longer than ten minutes, sometimes hours, and have definitely caused some frustration. This article will explain to newcomers what it means when transactions take this long, and suggested solutions and contrasting opinions to this issue.
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There have been complaints lately in regards to unconfirmed transactions within the network. You can see this on the subreddit r/bitcoin, bitcointalk.org, bitcoin.com’s forum, and of course r/btc nearly every single day. Some have assumed that there are posts created deliberately by people in order to sway the block size debate. Despite this, the problem is considered legitimate to some as people are waiting longer for confirmation times and are paying larger fees to miners.
Quite a bit of Bitcoin wallet companies have recently added a replace-by-fee to their software’s interface for users to prioritize transactions with different fee tiers. However, not all wallets give this option, and some users suffer from whatever fee the platform decides to use as the fuel to prioritize transactions, which at times, can be too little. This makes users wait longer for transactions to confirm and can take hours or even days. If a transaction does not confirm within a three day period, the transaction will drop from the mempool.
Mempools often get filled up when volume is particularly high, and this typically happens when the price rises as transactions increase, people look to cash in gains or use their valuable bitcoins to purchase physical goods or services. Users waiting for a transaction to confirm have to use a blockchain explorer to figure out where their transaction is at the moment in time.
Usually, if it goes unconfirmed after three days, most block explorers will drop the transaction off their interface data. This means typically the mempool will drop the transaction and funds are sent back to the original wallet.
However, in my case after the three-day mark and blockchain.info’s explorer dropped my transaction, the exchange was eventually confirmed and I had received the funds into my Circle Financial account. The case in point for newbies is to reassure them that bitcoins are never lost in this limbo-state and eventually are returned to the original wallet, or they confirm. So stressing about fear of loss is unnecessary.
So Bitcoin supporters who have just been introduced to the cryptocurrency might wonder what solutions are on the table to fix these issues of extended transaction times and higher fees. There are a bunch of fixes being discussed as we speak and all of them may or may not help the current situation. But all of them are being experimented with, researched and debated on whether or not they will help the transaction time and current fee market rise, otherwise known as scalability.
The first solution on the table is a fork to raise the block size to either 2 megabytes (MB) or higher. Currently, the block size is capped at 1 MB and was put into place because people had concerns about tiny spam transactions clogging up the network. With the block size set at 1 MB, this is said to limit the amount of transactions per second, which is roughly around seven at the moment. There are those who believe increasing the block size or removing the cap would allow for more transactions and become competitively as fast as networks such as those of major credit cards.
Segregated Witness (segwit) is another on chain idea coming shortly to the Bitcoin blockchain. Segwit is a proposal that splits transactions up segregating transactions signatures (witnesses), after which the data gets handled separately. The protocol is said to make enhancements by modestly bumping up transaction time and eliminating malleability. By segregating the digital signatures into another merkle tree, segwit could possibly include a lot more transaction data and increase bandwidth. Talks of releasing this into the wild beyond the testnet seems to be imminent.
There are those who are against bigger blocks and complain there will be centralization in the realm of mining due to an increase. It has also been said that it will lower the fee market, and miners would be less incentivized to secure the network. Alongside this argument, bandwidth would require heavy downloading for full nodes and the change would add quite a bit of gigabytes to the already large 87.84 GB Bitcoin blockchain.
There are many other arguments concerning these particular proposals of raising the block size, and there are many proponents who believe this will solve the mempool issue, slow transactions, and a higher fee market. There are multiple BIP proposals on the table regarding a block size increase in this nature as well as attempts to advance the idea with clients such as Bitcoin XT, and Classic. Consensus is needed for these solutions to be adopted.
Off the Chain
Currently, there are three popular off chain solutions being discussed. The Lightning Network is one such concept that may address the transaction bloat as well proponents of this idea explain. According to the Lightning Network’s website, it says the system is “capable of millions to billions of transactions per second across the network.” The protocol depends on using Bitcoin’s smart contract scripting language and has been theorized by proponents to fix scalability issues and significantly lower fees allowing for better microtransactions.
Another off chain solution that is called Duplex Micropayment Channels (DMC) was introduced by Dr. Christian Decker of ETH Zurich and Professor Roger Wattenhofer. Decker doesn’t believe the network can scale at the moment and has proposed his DMC solution back in 2015. The off chain approach uses decreasing timelocks, which separates the idea from the Lightning Network that uses a private key method. Payments are said to be end-to-end secure using hashed timelock contracts that separate into channels by two users, which could enhance scalability and feature micropayment channels. Alongside the DMC proposal, a malleability BIP must also be applied to the network before implementation.
Just recently a new off chain payment solution has entered the realm of Bitcoin land. The Thunder Network has been unveiled by the Blockchain.info (BC.info) team the creators of the popular wallet service and explorer. The developers over at BC.info say the Thunder Network will scale faster than traditional credit card processors and could handle 100,000 transactions per second. The idea is somewhat similar to the Lightning Network and operates in a trustless manner. The project is currently in Alpha and was tested by BC.info’s CEO Peter Smith and developer Mats Jerratsch.
There are quite a few disagreements concerning these off chain solutions, and one of them is it will bring centralized entities into the mix of a decentralized atmosphere. Those against these solutions believe private companies who created these off chain ideas have a lot to gain such as firms like Blockstream. Concerns like these say centralization will exist with certain parties handling the paths such as Lightning Network channels.
In many ways, people against off chain ideas say that trust moves back to centralized facilitators. Some arguments also say if a solution uses two-way pegging mechanism a failure could happen where bitcoins get trapped. There are many disagreements against off chain concepts, and some of them are parallel with the fears of raising the block size.
The best thing common users can do for now is to wait and review all the solutions on the table. Eventually, Bitcoin’s developers, investors, and community will come to a consensus. A 10 billion dollar market isn’t something you can just modify on a whim it needs heavy research and testing needs to happen well before supporters and miners adopt these features.
The longer waits are cumbersome, and many are against significantly larger fees, but it is being worked on by developers representing the code, and there are many things one can do to show support or even contribute to these solutions. That’s the beauty of an open source project such as Bitcoin. Fighting and censorship over these solutions in an unkind manner will not progress the situation any faster and most likely will deter most solutions. Helping people would be the most productive method in these times, such as recommending a better wallet that uses replace-by-fee features. Calming someone down could help if they have a stuck transaction. Having robust, healthy debates regarding the best way to enhance the Bitcoin Blockchain and doing so with tact, reason, and logic, as opposed to emotion, could go a long way.
The fact of the matter is no matter what side of this debate you are on, we can scale and optimize Bitcoin in the long run. Working together like open source code, peer-to-peer networks and decentralized individuals with recognized differences is the only way we get there.
What is your do you think about scaling Bitcoin, transaction times and fee markets currently? Let us know in the comments below.
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