By CryptoPotato

The onboarding of new Bitcoin users and the creation of new use cases for the leading digital network continue to emphasize the need to build scaling solutions on the blockchain.

A new research report by crypto exchange Binance, The Future of Bitcoin, outlines reasons why the crypto network needs strong scaling solutions.

Why Bitcoin Needs Scaling Solutions

In December 2022, Casey Rodarmor launched the Ordinals protocol, which led to the creation of inscriptions and triggered the Bitcoin non-fungible token (NFT) hype cycle in 2023. The introduction of inscriptions increased the demand for Bitcoin blockspace.

Following Ordinals was the creation of the Bitcoin fungible token standard, BRC-20, and subsequently, the Runes protocol, launched on the last halving day.

Launching these new protocols has attracted a new group of users, traders, builders, and even degens with a solid interest in Bitcoin. They have also triggered substantial effects on its key metrics. Crypto entities are funding and developing Bitcoin projects at a rate not seen for some time. Interestingly, some builders have begun to transition from alternative layer-1 chains to Bitcoin.

Besides these protocols, numerous new Bitcoin projects are currently being worked on while others have been launched. They range from various activities, with some focused on creating money markets or introducing staking and restaking on the Bitcoin network. Although these innovations signal the community’s confidence in Bitcoin’s long-term potential, they have led to a more congested mempool and higher transaction fees.

Preparing for Global Mass Adoption

Between 2022 and 2023, the average Bitcoin transaction fee rose 175% from $1.5 to $4.2. So far, in 2024, the fee has increased further to $9. Binance said this highlights the importance of Bitcoin scalability solutions, which can help move some transactions from the layer-1 to layer-2 networks.

The crypto community is focused on enhancing Bitcoin adoption, but users could face high transaction fees in the next few years. In 2023, the Bitcoin network processed 152 million transactions; this figure has the tendency to increase to 1.6 billion if 2% of the world’s population were to make ten Bitcoin transactions per year.

“If true global mass adoption really is the goal for Bitcoin, then it should be clear that at least a few Bitcoin scalability solutions would be necessary,” Binance insisted.

Meanwhile, Bitcoin scaling solutions like Lightning network, RGB, Stacks, BounceBit, and Merlin already exist.

SPECIAL OFFER (Sponsored)

Binance Free $600 (CryptoPotato Exclusive): Use this link to register a new account and receive $600 exclusive welcome offer on Binance (full details).

LIMITED OFFER 2024 at BYDFi Exchange: Up to $2,888 welcome reward, use this link to register and open a 100 USDT-M position for free!

Source: CryptoPotato