Vitalik Buterin, founder of Ethereum, has laid out an incredibly ambitious roadmap with “unlimited” scalability within two years in a 43-page analysis of blockchain technology and its strength and weaknesses in a public or private setting.
“The long term goal for Ethereum 2.0 and 3.0 is for the protocol to quite literally be able to maintain a blockchain capable of processing VISA-scale transaction levels, or even several orders of magnitude higher, using a network consisting of nothing but a sufficiently large set of users running nodes on consumer laptops.”
The ambitious goal follows Nakamoto’s vision who, in one of his first statement, replying to criticisms that Bitcoin cannot scale, stated:
Visa processed 37 billion transactions in FY2008, or an average of 100 million transactions per day. That many transactions would take 100GB of bandwidth, or the size of 12 DVD or 2 HD quality movies, or about $18 worth of bandwidth at current prices. If the network were to get that big, it would take several years, and by then, sending 2 HD movies over the Internet would probably not seem like a big deal.
“Unlimited” scalability will be achieved by the use of sharding, a fairly old concept (in digital currency terms), described by Gavin Andresen in one of the earlier debates about scalability:
If we have 20,000 full nodes on the network, do we really need every transaction to be verified 20,000 separate times? I think as [transactions] and [full nodes] increase it'd be OK if full nodes with limited CPU power or bandwidth decide to only fetch and validate a random subset of transactions.
No one is currently working on sharding for bitcoin. Ethereum, on the other hand, plans to release Ethereum Improvement Proposal (EIP) 105 early next year which, among other aspects, allows for capacity increase through parallelization.
Despite much criticism, debate, and controversy, the Bitcoin ecosystem seems to have (for the time being in any event) chosen to retain the 1MB limit with a modest increase of 1.5MB to 3MB (depending on use) from segregate witnesses which remains in testing with certain aspects still being finalized.
Once deployed, segwit will allow for Lightning payment channels, a technology being incorporated into Ethereum as “state channels”. Other optimizations are planned, such as Schnorr Signatures, which may provide a small increase in transaction capacity.
No timeline estimates have been provided, with segwit developers stating “it will be ready when it’s ready.” A reasonable guess may be late summer/early autumn for activation as another softfork (CVS) is now reaching the 95% threshold two months after release.
There are no known plans for ambitious on-chain capacity increase with some bitcoin developers being of the opinion that bitcoin cannot scale:
This is not a technical debate either. In an environment where Bitcoin does not scale up upwards indefinitely, ultimately what we're doing is talking politics. We are saying that some people in the Bitcoin space will lose out over others…
[I]n Bitcoin, we have regulatory issues. We may have some users of Bitcoin who follows laws that other people don't. Some other people may think those laws are unjust. If I am a Bitcoin user in a country like Russia, I want to ensure that I can continue to participate in Bitcoin.
Ethereum seems to be taking a different approach, both culturally and technically as Ethereum developers seem to have a philosophy of political neutrality:
“Ethereum's benefits come in the form of programmability, flexibility, synergy, modularity, and a philosophy of humility, reflecting that we can never know exactly what requirements every developer is going to have for each application, both now and even more so five years in the future. If legal research determines that KYC verifications, accreditation restrictions or other rules are required for a specific application, then an identity system can be built as a separate layer, and contracts can be written that directly plug into it.
"If your particular privately traded company, whose shares you want to have recorded on a blockchain, wants to have a restriction that new shareholders must be approved by 51% of existing shareholders, then you can do that without any change to either the base layer or any other part of your system.”
There are many technical differences between Bitcoin and Ethereum, as well as cultural differences, but what fundamentally sets them apart may be Bitcoin’s digital gold approach as opposed to what seems to be Ethereum’s digital cash approach. The different paths may allow them to co-exist, but network effects may initiate a race between the two impeccable development teams.
The heated scalability debate that began as soon as Bitcoin was announced may be settled by the judgement of the free market which has now been offered both options. Each has their pros and cons, making it difficult to predict which may be best in the long term, but what can be said with some level of certainty is that the world may see one of the greatest race of this century as the two different teams which share the same "artisan" culture and open source spirit collaborate and compete through different approaches, priorities and focus for the hearts and minds of the millenials.
[B]itcoin exists to solve a problem in the real world, which currently contains many millions of various governmental manipulations, and so it must take the game parameters that are given to it by the real world as given and survive despite them.
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