Blockstream co-founder and Bitcoin developer Luke Jr has proposed that the Bitcoin block size be reduced to 300kb temporarily. A report says he has already written the code for the shrinking of the block size. This may be motivated by an effort to maintain network integrity by reducing block size and increasing transaction fees.
Miners, the group of people who verify transactions on the Bitcoin blockchain are incentivized by paying a small fee for every Bitcoin transaction they verify. As a matter of fact, transactions are sometimes prioritized based on the fees attached to them especially when there are several transactions waiting to be processed.
Although they also get block rewards (currently 6 BTC) for mining blocks of transactions, this reward is halved every four years, which raises concerns that the network may not be secured by miners when block rewards become negligible in years to come unless fees are raised to continue to as incentive.
Although the reduction is temporary and the reason isn’t clearly stated, this may be the reason for the concerns, but they are contrary to the problems the Bitcoin network is actually facing. A major challenge to the scalability of Bitcoin has been the block size limit of 1mb which drastically reduces the number of transactions it can process in a second.
This has been the weak point Roger Ver, a prominent Bitcoin Cash supporter has used to say the Bitcoin Cash network is better than Bitcoin’s due to the small block size. The block size limit actually caused the fork of Bitcoin Cash from the main Bitcoin blockchain in 2017. The question is, how is a further reduction from 1mb to 300kb going to help Bitcoin to scale?
The cryptocurrency industry is experiencing growth right now and its future is getting brighter as institutional investors are getting into the market. Clearly, scalability will be a major determinant of which cryptocurrency gets favored and the industry does not want to leave the number one cryptocurrency behind.
The developers of all people should know this so we can only assume they have plans to make Bitcoin scale, so the temporary reduction may be to carry out a few experiments. The proposal has not been approved any way so we’ll wait and see what happens with the proposal. Meanwhile, what do you think the reduction will do to Bitcoin?