2023-11-03 23:21:20
© Reuters Solana and Bitcoin Cash should benefit from Bitcoin and Ethereum’s lack of scalability
Blockmarket – The (SOL) and Bitcoin Cash (BCH) networks have been one of the best performers throughout 2023. The price of crypto assets has soared by around 100% since the beginning of the year, amid a general market recovery.
Both networks focus on on-chain scaling, and allow the base layer to be used quickly, securely and at low cost.
While Solana is a similar network to , in that it focuses on running smart contracts and decentralized applications, it is primarily used as cash for payments with low fees and fast transactions (0 conf transactions).
Cash follows Satoshi Nakamoto’s original vision that Bitcoin must scale at its base layer to meet global demand. However, Bitcoin cannot currently handle much more than 150 million transactions per year, in a world that has more than 8 billion people.
High taxes
One of the immediate consequences of the increasing congestion of the Bitcoin and Ethereum networks is the increase in transaction fees. Earlier this year, blockchain network fees surpassed the $10 mark while hundreds of thousands of transactions awaited approval.
Bitcoin and Ethereum are primarily being scaled through second-layer networks. However, these projects have not yet been able to provide a reliable, scalable and secure solution for billions of people to have access to crypto assets.
The Lightning Network, Bitcoin’s main scaling solution, cannot in fact fulfill this promise, given its design that depends on transactions at the base layer. Likewise, Ethereum developers have also abandoned on-chain scaling, as Justin Bons, founder of Cypher Capital, highlights:
“I fully believed in the fragmentation promise of . Even pointing out my old mining farm to it in the first week of launch in 2015. As I was part of the BTC community that advocated L1 scaling. So when ETH abandoned L1 scaling by 2022, it betrayed to me that fundamental founding promise.”
As more individuals and institutions look for solutions that solve problems, Bitcoin Cash and Solana and other networks should benefit from this scenario of networks like Bitcoin and Ethereum becoming unusable. As these networks become more congested, the worse your user experience becomes.
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