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Blockchain works as a decentralized and public ledger where each block can be considered as a page of this ledger. Block contains complete and permanent information of Bitcoin network transactions. Connecting blocks to each other forms the blockchain. Bitcoin transactions must be confirmed by miners before being added to the block. The block size determines how many transactions are stored in each block. In other words, the number of transactions that a block can accept is defined as the block size.
At the beginning of Bitcoin’s history, the block size was 36 MB. But in 2010, due to spam attacks, this size was reduced to 1 MB. This size change at that time was to prevent spam attacks. Over time, as Bitcoin grew in popularity and the number of transactions grew, block sizes quickly approached capacity. This block size limitation reduces the scalability of the network. In other words, this size limit reduces the ability of the Bitcoin network.
This block size limitation caused the Bitcoin network to reach a smaller and less capacity point. This caused an increase in transaction verification time and an increase in transaction costs. Decisions about increasing the block size or using other methods to improve scalability are among the challenges facing the Bitcoin community.
Before examining the details of the BIP101 scheme and its effects on the Bitcoin block size, we will explain the concept of block and its importance. As you know, blockchain works as a decentralized and public ledger, where blocks can be considered as pages of this ledger.
The block contains the complete and permanent information of the Bitcoin network transactions, and the connection between the blocks creates a blockchain. Now we turn to the BIP101 plan, in which it was decided to increase the size of the Bitcoin block to 8 MB by January 11, 2016. This change allowed an 8 MB block to support 24 transactions per second.
After the failure of BIP101, other schemes were proposed to increase the block size of Bitcoin. Plans such as Bitcoin Unlimited, which was introduced in January 2015, allowed users to determine and direct block sizes themselves.
Or Bitcoin Classic, which was presented in February 2016 and was considered one of the most popular proposals for increasing the block size. The scheme initially faced approval of the agreements, but then announced that it had joined Bitcoin Cash in 2017.
Following successive failures to increase the block size of Bitcoin, the SegWit protocol emerged as a smart answer. This protocol was activated on July 21, 2017 and increased the block size of Bitcoin by removing signature information from transactions.
By removing parts of transactions, more space was provided for other transactions in the block. SegWit was able to provide a block weight of 4MB. This means that SegWit transactions can use a block size of 4 MB.
Finally, the history of Bitcoin block size changes has shown that this issue is complex and requires community consensus. Due to the variable and dynamic nature of the cryptocurrency community, decisions about increasing the block size always bring and will have challenges.
