William Suberg · February 10, 2017 · 3:01 am

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Smart contracts and digital currencypioneer Nick Szabo has added his voice to the Blockchain scaling

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Smart contracts and digital currency pioneer Nick Szabo has added his voice to the Blockchain scaling debate, stating that the Blockchain itself cannot handle card network transaction numbers.

Szabo: Periphery Network ‘Needed’

In a blog post Thursday, Szabo eloquently described the needs of Bitcoin’s blockchain in order for it to retain its core unique selling point: censorship resistance; or what he calls “automated integrity.”


“…Sacrificing performance in order to achieve the security necessary for independent, seamlessly global, and automated integrity, mean that the Bitcoin blockchain itself cannot possibly come anywhere near Visa transaction-per-second numbers and maintain the automated integrity that creates its distinctive advantages versus these traditional financial systems,” he wrote.

The best compromise, it appears, is for the implementation of the Lightning Network or similar protocol to handle smaller transactions, which would then be synced in one go to ensure authenticity.

Szabo continued:

Instead, a less trust-minimized peripheral payment network (possibly Lightning) will be needed to bear a larger number of lower-value bitcoin-denominated transactions than Bitcoin blockchain is capable of, using the Bitcoin blockchain to periodically settle with one high-value transaction batches of peripheral network transactions.

‘Nothing Impossible’ About Bitcoin, The Visa Rival

The Bitcoin blockchain debate has continued to involve high-profile commentators in recent months, including Tuur Demeester and Andreas Antonopoulos.

Speaking about how small-scale transactions would occur in a stable manner using Lightning Network, Szabo said that was “nothing impossible” about these allowing Bitcoin as a currency to enjoy all the features currently available with Visa, MasterCard and other card networks – but for a lot less in fees.

Visa Payments

“…There are also clever ways to do peripheral bitcoin retail payments in which small value payments happen off-chain and are only periodically bulk-settled on the Capital-B Bitcoin blockchain,” he said. “That blockchain is going to evolve into a high-value settlement layer as bitcoin use grows, and we will see peripheral networks being used for small-b bitcoin retail transactions.”

Developments are already being driven in this regard by the Yours network, for example, which has been working on its own Bitcoin micropayments channel inspired by the Lightning Network.

Cues For Litecoin?

The problems reaching a consensus within the Bitcoin community have meanwhile begun causing similar problems for Litecoin developers.

When an upgrade to segregated witness technology was announced January 28, it received a lukewarm reception as politics appeared to mire progress in a style reminiscent of Bitcoin over the past year.

Litecoin Bitcoinist

Speaking on Reddit, Litecoin creator Charlie Lee said it was “unfortunate that SegWit on Litecoin became political too.”

“One of the reasons I’m doing this AMA is to try to pull the politics out of the Segwit on Litecoin. Let’s not let Bitcoin politics pollute Litecoin for no reason,” he added.

Antonopoulos meanwhile has advocated Segregated Witness as a solution to Bitcoin’s scaling problems, which is a pre-requisite for the Lightning Network.

What do you think about Nick Szabo’s perspective? Let us know in the comments below!

Images courtesy of Shutterstock, YouTube, Coindesk

Bitcoin Block size debateLightning Networknick szaboScaling

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