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The limit on transactions per second is a function of the block size, currently 1 MB. Based on what the miners say, they would be interested in increasing the
by nas 9y ago
The limit on transactions per second is a function of the block size, currently 1 MB. Based on what the miners say, they would be interested in increasing the block size. Understand that the miners like high fees but they like high bitcoin prices even more. The fees are only a fraction of the block reward. If the system becomes too expensive then the miners will lose a lot more than just some fees.
The 1 MB limit is set by the bitcoin software. The software that most everyone runs is developed by a group called the "bitcoin core". That group has mostly been taken over by the company Blockstream (this is my opinion, others would argue the team is diverse and not controlled by any one company). Blockstream's business is based on off-chain transactions (i.e. the Lightning network).
It is in Blockstream's interest to get a feature that enables Lighting into the Bitcoin software (SegWit). Miners have been refusing to upgrade. One theory is that SegWit will disable a special optimisation that one of the biggest miners uses (ASCIBoost). In any case, Bitcoin core team refuses to increase the block size and the miners have been refusing to enable SegWit.
The SegWit upgrade is a good thing, IMHO, even though it seems like a pretty complicated feature. Having the ability to open "payment channels" and make cheap transactions off the main chain would be great. However, I feel that a block size increase to 2 MB or 4 MB is long overdue. I don't understand all the technology issues so maybe there is some really good reason not to do it.
It is clear to me that Satoshi (founder of Bitcoin) and Gavin (previous leader of Bitcoin core group) felt that the block size could be scaled to keep fees low. Both software improvements and hardware/network improvements would progress quickly enough to scale with demand. The current core team does not think so and think off-chain transactions are the only way to scale now.