Toms Blog

Where I talk about Bitcoin Cash and more

Scaling Bitcoin on chain

2016-07-11 bitcoin

One of the most talked about topics in 2016 when it comes to Bitcoin is the lack of a good plan for growing and scaling the system into the future.

I find this curious, as anyone that starts to depend on any system should do at least some investigation on what kind of growth it can handle and whether it can actually do what we want it to, this year and 5 years or longer into the future.

In this post I want to investigate what kind of scaling we can expect Bitcoin to have and what we need to do to get more scaling out of the system if these expectations prove not to be enough.


The number one reason that Bitcoin has value right now is its promise that Bitcoin will be used and seen as useful by millions of people in the not-so-far future. Any money only has value when enough people assign it value. Any money only has value when it can actually be used. If nobody accepts it for payments, the value will not be realized.

So the number one goal is to allow millions of people to be able to use Bitcoin in their day-to-day lives, where ‘use’ is defined as making at least one transaction a day. As with any technology, we don’t expect this load to be available tomorrow or even this year, as growth happens over time and systems get built over time.

So let’s have a goal of 50 million users sending one transaction a day using the Bitcoin network. Not today but 5 years into the future.

A further goal for home-users is that the rate at which they can process Bitcoin blocks should be at least five times the speed at which they get created. This means that if a system has no internet for an hour it would take around 20 minutes at full speed to catch up (process the backlog and process all new transactions generated while processing the backlog).
Faster is better, but slower than 5 times the creation speed is too slow.


Or, what is the current theoretical level of support?

Bitcoin, in the form of various node-software implementations, has had several years to mature. The leadership was not really focused on large growth of this basic layer, as we can see from the uptick in progress that started happening after Bitcoin Classic and Bitcoin Unlimited started competing with them. As usual, competition is good for the end-user and we see some promise of future gains appear.

But let’s take a look at what kind of transaction load we could support today.

Last week published a video about time it takes to download, fully validate and check 7 years, or 420000 blocks of Bitcoin history (from day one of Bitcoin). This is 75GB of data which took 6 hours and 50 minutes to fully validate on mid-range hardware. It wasn’t cheap hardware, but it was certainly not top-of-the-line or server hardware. In other words, it is a good baseline.

Taking a closer look at what was done in 6hours 50min:

  • since block 295000 till block 420000 (125000 blocks) each and every transaction signature has been validated.
  • 75GB was downloaded from Bitcoin peers around the world.
  • A UTXO database of 11 million transactions with 40 million not yet spent Bitcoin addresses was built. (see the RPC call gettxoutsetinfo).
  • The 125000 blocks contained 104847758 transactions which were all validated. That’s 105 Million txs.

We understand that this was all done with no tweaks to the settings. This was a Classic 1.1.0 node (with performance equivalent to Bitcoin Core 0.12.1)

What needs work?

Let’s take a look and compare our baseline to our goal. Most people would like software to always get faster and better, but priorities matter and we should look at which parts need attention first.

Our goal was that individual nodes need to be able to process about 50 million transactions in 24 hours.

We noticed that in the baseline check of 6h50m, our node actually downloaded, stored, and checked almost 105 million transactions. This leads to a daily rate of 368 million transactions being downloaded and validated.

$$ TX_{day} = {{104847758 tx \over { 6 * 60 + 50 minutes}} * 24 * 60 minutes} = 368 million$$

This means that our 5-years-in-the-future goal of 50 million transactions per day is already not an issue for bandwidth and for CPU power today. In fact, our baseline system managed to exceed our goal by a factor of 7.

Our baseline system could handle 7 times our 5 years in the future goal volume today!

Today, an individual Bitcoin node can download, store and validate 368 million transactions a day. That’s many times the volume that has ever been sent using Bitcoin.

How do I see the system scale?

A typical home-node

A node that validates all blocks fully is needed in order to keep everyone honest. It also gives me the peace of mind that if I trust my node, I don’t have to trust anyone else. So I foresee that you will get small communities gathering around full nodes. You can let your family use it, or maybe your football club or church will set one up just to support the community. Individuals will then make their phone-wallets have at least one host they trust, which is the one from your community.

This preserves Bitcoins greatest assets, you don’t have to trust banks or governments. People trusting their local church or football club is much more normal and common to do.

Such a node would have no need to keep the full history from block zero. It would turn on pruning. With today’s price of hardware this does not mean it would stop being able to serve historic blocks, because it could easily hold a month of blocks history. This does, however, mean we need to make the software a bit smarter. See some [[pruning|scaling/Pruning]] ideas.

Hard drive space is cheap today. A 3TB harddrive stores 75 years of Bitcoin history at current block size. But what if we start getting to our goal. What kind of hard drive do we need?

The answer to that is that we don’t need anything large at all. The idea that we need to have a larger hard drive because blocks are bigger is a misunderstanding. We should work on some [[pruning|scaling/Pruning]] ideas in order to scale the system without everyone having to invest in storage space.

The last of the big components for our hone node is Internet connectivity. To reach our goal we need to be able to download 50 million transactions at about 300 bytes each over a 24 hours period.

$$ {50 000 000 * 300 \over {24 * 60 * 60}} = 173611 bytes/sec $$ $$ {173611 * 8} = 1.39 Mbit/sec $$

Ideally we go 5 times as fast to make sure that the node can ‘catch up’ if it were offline for some time. We may want to add some overhead for other parts as well. But 1.39Mbit minimum is available practically everywhere today. 2Gb which is 1440 times faster than what we need to reach our plan in 5 years is available in countries like Japan today.

Home nodes have absolutely nothing to fear from even a huge growth of Bitcoin to about 50 million daily users. Their hardware and internet will cover them with no pains, especially in about 5 years when more software optimizations may have been created.

Notice that there is no dependency on principles like Moore’s law here, no hardware growth is needed to reach our goal.

A typical user

A typical user is suggested to use a phone or hardware wallet. The actual requirements are really low to be able to make payments safely, and fast if you use SPV clients.

Current wallets are in need of some work, though. They are typically quite greedy in using network to update the state of the wallet. While useful, this is not wanted in many situations: when I’m abroad on an expensive data-plan, for instance.

There is no need to do any communication with the network before creating a transaction that pays a merchant. Only the actual payment itself needs to be transferred to the Bitcoin network.

A typical user uses a phone. On the topic of scaling there is little to nothing they must do in order to continue working with on-chain scaling.

Usability and related topics in thin clients do need substantial amounts of work though.

A typical mining node

Miners need a full node. Where ‘full’ means that it validates all transactions. In addition to what a home-node needs, a miner also needs a fast connection between miners and to have a fast way to broadcast his blocks to other miners.

Just like with a typical home-node the amount of bandwidth and harddrive and CPU speed are already today mostly sufficient for being part of the network.

Additionally, a miner uses their node to create block templates. Which means they takes a section of the pool of unconfirmed transactions and creates a block based on that. This process has seen some optimizations already, but more could be made. For instance the getblocktemplate RPC call checks the block it just created for validity before it returns it. This check takes quite a lot of time and a simple solution would be to decouple the returning of the block and the validation so the miner can start mining optimistically over the check passing (it should pass in 100% of the cases anyway).

The bigger the blocks get, the more data is returned, and the system currently uses JSON which is almost the worst type of data-container for large binary data-blobs. A simple replacement of the RPC interface with something that just changes the communication format to be binary is relatively easy to do (a month project, probably) and likely needed for miners to not end up waiting too long on interface delays.

In our baseline node we explained that it took 7 hours to fully sync a brand new node from zero. This will stop being the case when we scale up to much bigger sizes. It will start taking a substantial amount of time to do the initial sync. Yet, a miner requires a fully synced node. Bitcoin Classic already has one big change there that will push down the validation time substantially. It introduced dynamic checkpoints which allow the node to skip validation of transaction data by assuming that about a week’s worth of blocks will not be built on top of double-spend data. This would remove the validation of 100s of millions of transactions for a starting node.

Another suggestion for future Bitcoin clients meant for miners is that a new node can be pointed to a known and trusted node. The new node would then receive the UTXO and all other details it needs to be up and running quickly from this trusted node. Which means that after downloading only a couple of gigabytes you can have your new node up in 10 minutes.

The most important improvements for mining are various ways to ensure fast download and upload of the actual new blocks.

First there is xthin, which is a way to make a 1MB block only cost 25KB to send to all miners. This scaling is linear in that a 10MB block will likely be around 250KB to send.

Next to that is a technique I called “optimistic mining”, which helps miners by splitting the uploading of blocks into two parts. One is a super fast notification of the new block. Just the block-header. A miner receiving such a header validates it has valid proof of work and then can start mining empty blocks on top. When the full block has arrived and all transactions are seen. All transactions in the mempool are updated to account for the new block, and last, a new block template is created with as many transactions as fit, only then does the miner start mining it.

Many of these techniques are already in development or planned to be developed in the next year or so. In order to reach our 50 million users per day in 5 years most of these will be more than enough to make a miner able to keep connected to the Bitcoin network without having to invest in a high-end server for the Bitcoin node.


The goal I tried to argue from is 50 million users per day. This goal is a huge increase from today. But to make sure we do it properly, my goal is set 5 years in the future.

Scaling Bitcoin nodes is ultimately boring work with very little effort needed because it turns out that a modern simple system can already scale easily to 10000 times higher than the current maximum allowed size.

Scaling the entire system takes a little more work, but mostly because miners have not received a lot of new features that they would need in order to make scaling safe for them. Most of those features could be added in a matter of months, with technologies like xthin blocks and optimistic mining already well underway.

The conclusion that I have to draw is that the goal of 50M/day is not just reachable, the timeline of 5 years is likely one that we will beat quite easily.

Smart tricks like Lightning network are not mentioned at all in this document because there is no need for them. Bitcoin can scale on-chain quite easily with almost no risk. Ideas like Lightning are quite high risk because there are so many unknowns.

By far the biggest problem with regards to scaling today is the protocol limit of 1MB block size. This should be removed as soon as possible.