Prior to the major clearance of the bitcoin mempool, the holding area for unconfirmed transactions waiting to be picked up by miners, a large number of bitcoin transactions were left unconfirmed for days despite the attachment of high fees.
Such occurrences emerged due to the variation in the size of bitcoin transactions. Unlike the Ethereum network or other specific blockchain networks, transactions on the bitcoin network have different sizes depending on the number of inputs and outputs. Currently, the median size of bitcoin transaction is 226 bytes but the size of bitcoin transactions can greatly vary at times.
Thus, users of wallet platforms that had fixed transaction fee recommendations which failed to take the variation in bitcoin transaction size into consideration struggled with significant delays with their transactions. Instead of calculating the size of the transaction and recommending fees based on the transaction size, the vast majority of wallet platforms simply offered two options: low or high fees that ranged from $0.5 to $2.5.
In certain cases, users discovered that $2.5 fee was not sufficient for transactions that have many inputs and outputs. 21 Inc’s Bitcoin Fees, an open source bitcoin fee estimator, clearly recommends a fee based on the median transaction size but does not take the variation into consideration.
After careful consideration of user feedback, Blockchain, the world’s largest bitcoin wallet platform that oversees nearly 15 million wallets, deployed a new fee estimation program that allowed users to attach fees on a satoshis per byte basis.
On June 22, Blockchain CEO Peter Smith revealed in an interview with CNBC that the bitcoin wallet startup raised $40 million in funding from Google’s investment arm Lakestar and billionaire investor Richard Branson.
Smith emphasized that with the new funding round and newly acquired capital, the company will focus on addressing scalability of their product and global expansion to meet the increasing demand towards bitcoin from its international user base.
“We are really focused on scaling to meet the record demand we are getting in the market. We started raising this round before the run up in the cryptomarket. It was good timing in the end because while we were closing the round, we were massively up on every level. Our traffic has been growing 15 percent week over week in last two weeks,” said Smith in an interview.
The implementation of the new Satoshis per byte fee estimator program is a part of the Blockchain development team’s scalability roadmap in that it allows users to adapt to the increasing fee market efficiently without the necessity of manually calculating transaction size and fees.
Other wallet platforms such as Samourai Wallet are also looking into the commercialization of Bitcoin Core developer Peter Todd’s Replace-by-Fee method that allows users to attach a new fee in order to process stuck transactions due to low fees.
As bitcoin approaches scaling, startups including Blockchain are successfully providing its users with more efficient and practical applications to ease the settlement of payments and transactions. With such applications and programs in place, the activation of a viable scaling solution such as the Bitcoin Core development team’s Segregated Witness (Segwit) is expected to further enhance scalability.
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Last modified: June 12, 2020 3:54 PM UTC