Bitcoin network congestion

The Bitcoin blockchain works on the Proof-of-Work algorithm. Miners who maintain the system are rewarded for each block mined and paid for all transactions included.

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Transfers with the highest fees are processed first. The rest wait their turn. A delay in payment verification would take forever. Because a transaction with a low fee would not be included in the block. To avoid this, Bitcoin has a rule: coins will return to the sender’s wallet by timeout (usually 72 hours).

Transaction speed

The Bitcoin network is capable of processing no more than 7 transactions per second. In the same amount of time, Visa lets 24,000 transactions through. While the blockchain is working, a transfer is confirmed within 15 minutes to an hour. But if the network traffic is higher than usual, it can take several days to complete the transaction.

A transfer requires at least 2 confirmations from computing machines. Their exact number depends on the settings of developers and wallet owners. Usually 6 validations are required to fully complete a Bitcoin transfer.

Unconfirmed transactions

One of the peculiarities of the main cryptocurrency is that in case of high utilization and low fees, the transaction will not be included in the block. If the addressee does not receive the transfer for a long time, you need to:

• Increase the size of the commission. The method may not work for owners of outdated versions of wallets, in which such a function is not provided.
• Send a repeated payment with a higher commission. The next operation will be faster. The system will eliminate the first one. This method should not be abused, as there is a probability that both payments will pass.
• Use CPFP (Child Pays for Parents). The sender of an unconfirmed transaction can create a child transaction. And set the reward for it higher than for the original one.

It should be taken into account that there are no methods that guarantee instant transfer of coins. But many solutions allow to speed up the transaction. Another factor that can lead to payment hang-up is incorrect execution of the transaction. In this case, the money will be lost.

Impact on performance

Bitcoin was the first experimental cryptocurrency. When creating the asset, it was impossible to take into account all the potential difficulties. Many of them remain unresolved in 2021. One of the most common problems is the blockchain’s decreasing uptime with each connected device.

How to check the busyness of the Bitcoin network

The growing popularity of BTC is creating a frenzy around the coin. Users begin to actively buy and sell cryptocurrency. However, the system is not able to quickly confirm payments, so queues are formed.

To check the online load on the BTC network at any time, you can use special resources (observers). These services monitor the state of the blockchain and the number of unconfirmed transactions.

BTC observers

Blockchain monitors provide complete statistical information about each transaction, the block it is included in, and the sender and receiver addresses. The most popular bitcoin observers in 2021:

• Blockchain.info is the oldest monitor that contains a lot of statistics and charts. A user only needs to enter the wallet address to get information about all transactions made, including the identifier, total dollar amount as of the transaction date.
• OXT – demonstrates data similar to other blockchain monitors. But wins in visualization due to graphs and trajectory display tools.
• Statoshi.info provides real-time information on Bitcoin network statistics. Shows average fee price, bandwidth utilization, performance data.

Network scaling problem

The main advantage of blockchain is decentralization. It can be thought of as a ledger that stores all the information entered. A distributed system ensures that the loss of a small part of data will not affect the overall functionality. And through constant authentication checks, the network eliminates the possibility of fraud.

But the calculations take a certain amount of time. And this reduces the throughput of the system. The problem is partially solved by connecting new devices. But the speed of block generation remains low.

The slowdown of the system with increasing growth of nodes in it is called a scaling problem. It first became known about it in December 2017. Then the BTC exchange rate began to grow rapidly, and the number of users increased daily.

The developers suggested two different ways to solve the problem:

1. Increase the size of the blocks and optimize the information stored in them. This solution is effective, but it complicates cryptocurrency mining. The number of nodes in the blockchain grows exponentially. This requires a constant increase in block size. Therefore, computing machines with low power will not be able to compete with ASIC farms (devices for mining BTC).
2. Implement additional external protocols and optimize the stored information. This method involves collecting a certain number of transactions and encoding them in the Bitcoin protocol. The method allows for reverse decryption so that the validity of the information can be habitually verified. As a result, not only the throughput but also the security of the blockchain is increased.

The second method was more successful. It is used in the Lightning system. But this solution is also temporary. Since the number of new users and the load is growing. Further scaling is possible by changing algorithms. But in 2021, this idea was only being tested.

Summary

Bitcoin’s congestion is a serious problem that slows down the speed of transaction processing. Miners don’t take on transactions with low fees, confirming expensive transfers in order of priority. The workload increases when the cryptocurrency experiences sharp rate fluctuations and users actively trade coins.

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