Here's why Bitcoin needs scaling solutions, according to Binance

The addition of new bitcoin users and the creation of new use cases for the leading digital network continue to emphasize the need to create scalable solutions on blockchain.

A new investigation report from crypto exchange Binance, The Future of bitcoin, outlines the reasons why the crypto network needs robust scaling solutions.

Why bitcoin needs scaling solutions

In December 2022, Casey Rodarmor launched the Ordinals protocol, which led to the creation of signups and triggered the hype cycle for bitcoin non-fungible tokens (nfts) in 2023. The introduction of signups increased demand for bitcoin block space .

After Ordinals, the bitcoin fungible token standard, BRC-20, was created, and later, the Runes protocol, launched on the last day of the halving.

The launch of these new protocols has attracted a new group of users, traders, builders, and even degens with a solid interest in bitcoin. They have also caused substantial effects on their key metrics. crypto entities are funding and developing bitcoin projects at a pace not seen for some time. Interestingly, some developers have started transitioning from layer 1 alternative chains to bitcoin.

In addition to these protocols, numerous new bitcoin projects are currently being worked on and others have been launched. They cover various activities, some of which focus on the creation of money markets or the introduction and renewal of staking on the bitcoin network. Although these innovations indicate 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 increased by 175%, from $1.5 to $4.2. So far in 2024, the rate has further increased to $9. Binance said this highlights the importance of bitcoin scalability solutions, which can help move some transactions from Layer 1 to Layer 2 networks.

The crypto community is focused on improving bitcoin adoption, but users could face high transaction fees in the coming years. In 2023, the bitcoin network processed 152 million transactions; This figure tends to increase to 1.6 billion if 2% of the world's population made ten bitcoin transactions per year.

“If true mass global adoption is indeed the goal of bitcoin, then it should be clear that at least some bitcoin scalability solutions would be necessary,” Binance insisted.

Meanwhile, bitcoin scaling solutions such as Lightning Network, RGB, Stacks, BounceBit, and Merlin already exist.

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