Let’s talk about Bitcoin scaling because there are a lot of misconceptions about it.

I heard someone say:"I have a friend who is a technologist who looked at Bitcoin and said 'Bitcoin is very attractive, but it's impossible to scale'."Could this expert be wrong? What exactly is going on?

One of Bitcoin's most important jobs is processing transactions that are transmitted onto the network. Verification is done by users running full nodes, and miners package these transactions into a block, which becomes part of the blockchain. Generally speaking, the more popular Bitcoin is, the more transactions are sent. However, there is an upper limit to the number of transactions that a block can hold. This limit is based on the total size of the transaction, which has been increased over time. Recently, with the development of a method called"Segwit "Or the scaling method of Segregated Witness, where the block size is replaced by the block weight.

Pardon my technical gibberish, but essentially this does mean that there is a limit to how many transactions a Bitcoin block can hold. So, is the Bitcoin blockchain scalable? Actually, it can. But the limitations of on-chain transactions mean that currently only 1-2 million transactions per day (depending on the size of the transaction) may be completed. Here is a simple calculation, there are nearly 7 billion people on the earth, but it can only accommodate 1 to 2 million transactions? In fact, the Bitcoin network processes 498,000 transactions in a single day, according to Coinmetrics. Is this a problem?

This can be a problem if there is no plan. Fortunately, it turns out that Bitcoin is likely destined to become the base layer of a new global monetary network. I'd say it's getting close to that. In the early days of the Internet, it was widely believed that the Internet would not scale, or at all. The argument is basically that the more nodes you add on the internet, the more traffic you need to transmit. This is a typical n squared problem. Given the limited amount of information that can be conveyed on fiber optic cables, these guys seem to be right.

However, as we now know, the limits of network transmission have been steadily increasing. Dial-up Internet service probably peaked at 56k, but then came ADSL, DSL, cable, fiber optics, 3g, 4g, 4gLTE, 5g, etc. Cellular networks. What does this have to do with Bitcoin and its own block size limit? It turns out that one of the ways we scale the Internet is by using the OSI model. This model basically says that each layer of the network has a set of things it is responsible for. For example, the hardware layer needs to provide a stable, physical connection. Working your way up from the hardware layer, you end up at the application layer, where the programs you run connect to whatever they need, with only the smallest transport medium in mind. Think about it, does a network cable care what it is used for? Does Word care if you're using a wired or wireless connection?

One of the most important differentiators of the Bitcoin network is its simplicity. The more functionality you try to cram into a technology, the harder it is to maintain. Satoshi Nakamoto knew this and also knew that something simple has a smaller attack surface (better security).

But if Bitcoin is the base layer of a new economic system, what layers will it support? An interesting development in this regard is the use of wrapped BTC, i.e. programmatically locking bitcoin so that it can be transferred on another blockchain. Why do you want to do this? Bitcoin is what you could call a "god" in the digital asset world. DAPPS need something of value to secure them. And since Bitcoin is the safest and most valuable digital asset, it was a natural choice. You might say that this progression is not a second layer, but a scale-out solution, and you'd be right.

However, I think the clearest application of the second layer of Bitcoin technology is the Lightning Network. The premise is that since it can be said with certainty that Bitcoin transactions cannot be reversed, then you can realize the security of locked Bitcoins by yourself. Then, once the funds are secured, they can be transferred with incredible speed (a fraction of a second) to anyone using the Lightning Network, in a way that actually gets faster as more people use it.

Critics will tell you that the technology is still in its infancy, and to some extent they are right. But the promise of this technology is that Bitcoin will simultaneously be the store of value we know and love, while also enabling near-infinite processing scale for any day-to-day transaction you might want to make.

It’s worth noting that while the Bitcoin blockchain (e.g. the base layer) will continue to grow, most of the scaling we should expect will come from the second and third layers. But in the process, the base layer is getting stronger. Several developers have proposed solutions that will significantly increase the processing scale and speed of transaction verification at the base layer (Bulletproof protocol, Schnorr signatures, etc.). On the whole, I think that the general trend is that the base layer will continue to expand in a logarithmic curve. That is, the scaling of the base layer will never be complete, but up to a point, the increase in processing size will be minimal. Bitcoins transferred on the Lightning Network only touch the Bitcoin blockchain when funds are deposited or withdrawn. This means that hundreds or thousands of transactions can be sent or received with very few operations on the Bitcoin blockchain.

We've seen entire ecosystems spring up around the promise of the Lightning Network. Exchanges start accepting Lightning Network deposits and withdrawals. There are tipping bots on social media platforms where users can send small transactions in seconds. And hardware companies are building specialized equipment so users can run their own Lightning nodes.

Bitcoin will continue to scale to meet demand. However, we should not regard it as the ultimate option. Bitcoin is just a very important part of the blockchain development.