Ethereum is Processing More Transactions Than Bitcoin After Byzantium Fork
Donald McIntyre, the founder of Etherplan and highly regarded Ethereum analyst, revealed on October 19 that the Ethereum network has begun to process more transactions than Bitcoin after the Byzantium hard fork.
At the time of reporting, the Ethereum network is processing around 540,000 transactions on a daily basis, nearly twice as that of the Bitcoin blockchain. According to Bitcoin data providers such as Blockchain, the Bitcoin blockchain is processing around 323,000 transactions per day, a daily volume that is substantially smaller than that of Ethereum.
Reasons Behind Ethereum’s Larger Capacity
Structurally, Ethereum was designed to operate as an infrastructure for decentralized applications (dapps). Hence, transactions in the Ethereum network represent fees sent to applications, rather than actual payments. But, because Bitcoin was developed to be a financial settlement network, the purpose of its transactions is to facilitate payments between users in a peer-to-peer environment.
As Ethereum co-founder Vitalik Buterin explained at a conference organized by TechCrunch hosted by prominent venture capitalist Naval Ravikant, Ethereum is able to process five to six transactions per second, in contrast to Bitcoin which is limited to three transactions per second as of current.
As scaling solutions and second-layer applications like Plasma become integrated to the Ethereum network, in the next few years, the Ethereum blockchain will be able to process significantly more transactions than most public blockchains. But, Buterin emphasized in an interview with Joong Ang, a major business and financial news publication in South Korea, that it could take three to five years to reach that level of scalability.
Impact of Byzantium Hard Fork on Ethereum Capacity and Potential of Second-Layer Solutions
As Mohamed Abedelmalik, the Executive Director of Columbia Blockchain Lab, noted in an analytical blog post, the recent Byzantium hard fork led by the Ethereum Foundation and its open-source development community has increased the capacity of the Ethereum blockchain by removing unnecessary transactional data.
By removing the state tree root, which in essence acts as a transaction’s receipt, Abedelmalik emphasized Ethereum blockchain has achieved faster transaction processing.
More to that, in the upcoming months, second-layer solutions like Plasma are expected to be implemented by the Ethereum development community, which would enable interconnected blockchains or multiple blockchains to process transactions and smart contracts in the Ethereum network.
Christian Reitwiessner, the Team Lead at Ethereum and creator of Solidity, wrote:
“Here, the scalability does not come from the fact that blockchains are relieved from their load by creating a big number of smaller chains and moving the transactions there. Scalability is only achieved once a user does not have to verify every single transaction that is sent to the system.”
Ultimately, Buterin and the rest of the Ethereum Foundation envisions to scale the Ethereum blockchain network to the capacity of centralized settlement networks such as Visa, through unique and innovative solutions like Plasma. However, Buterin noted that to achieve such scalability, the integration of the proof-of-stake protocol is necessary.