Cryptocurrency derivatives exchange FTX’s Founder Sam Bankman-Fried recently suggested that digital assets hold “huge promise” for payments but are currently held back by lack of scalability.
The cryptocurrency billionaire, in a long Twitter thread, said that for blockchain to be used at an industrial scale, it needs to scale up faster than it currently has. Today, a blockchain network can do more than 50,000 transactions per second.
Blankman-Fried believes the network needs to do more than a million transactions per second.
“So what matters the most is having a concrete roadmap to scale to millions of TPS and executing well on it,” Blankman-Fried said. Blankman-Fried was addressing the challenges that the cryptocurrency industry needs to address in 2022 through a Twitter thread.
Why is scalability an issue?
Scalability has been a major issue, especially for cryptocurrencies like Bitcoin. On the Bitcoin blockchain, scalability has been limited average time taken to create a block of transactions on the network, which is 10 minutes, and the original block size is 1 megabyte.
The constraint imposed on the Bitcoin network by its founder Satoshi Nakamoto means that the amount of transactions per second that can take place on the network is limited.
Why is the scalability of blockchain important?
Blankman-Fried believes that the crypto industry got off to a great start, as reflected in the explosive growth in the user base seen in 2021. The crypto industry currently has around 200 million users around the world.
According to Blankman-Fried, the lack of scalability could hinder the experience of buyers and sellers on the blockchain. It could also hamstring the industry’s ability to tap the potential in gaming and non-fungible tokens.
“I always laugh when a blockchain says they’re already fast. None are! Fast means millions of TPS. Nobody is there yet,” Blankman-Fried said.