What is Bitcoin Scalability Limits?
Summary
Bitcoin is limited to processing just 7 transactions per second—a major barrier to becoming a global payment system. Learn about where the Bitcoin scalability problem comes from and how it is being addressed by Bitcoin layer 2 solutions.
According to Bitcoin whitepaper, Bitcoin scalability limits are the network’s capability to process large numbers of transactions in a short time. This is due to the intentional design architecture of the Bitcoin network to preserve decentralization and security.
Bitcoin can’t scale on Layer-1 like Visa because block production (~10 minutes) and limited block capacity (block weight) strictly cap how many transactions fit on-chain. That’s why Bitcoin is often quoted at ~7 TPS, but in real usage it can be closer to ~3–4 TPS depending on average transaction size and how congested the mempool is. When demand exceeds capacity, the network doesn’t speed up—fees rise and confirmations take longer.
Understanding Bitcoin's scalability problem means understanding the core tradeoffs between decentralization, security, and throughput that define not just Bitcoin, but the entire blockchain industry.
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What is the Bitcoin scalability problem?
The Bitcoin scalability problem refers to the limited capability of the network to handle large volumes of transaction data within a short timeframe, a consequence of the architectural design made to prioritize security and decentralization over raw throughput.
As the network serves as a global, immutable ledger, every node in the distributed system must be capable of verifying the entire history of transactions, leading to fundamental bottlenecks in block size and block frequency.
Where do Bitcoin scaling limits come from?
Core Technical Definition
According to Bitcoin whitepaper, the Bitcoin network scalability is fundamentally defined and limited by the interaction of two fixed protocol parameters: the block creation time and the block size limit.
- Block Size Limit: The amount of data that can be included in a single block. While originally capped at 1 megabyte (MB), the 2017 SegWit upgrade transitioned this to a Block Weight limit of 4,000,000 weight units (WU), allowing for an effective block size of approximately 1.8 MB to 2 MB depending on transaction types.
- Block Interval (Block Time): The average time it takes to mine a new block, which the protocol targets at 10 minutes through the Proof-of-Work difficulty adjustment.
In many readings, people refer to block size limit as the data capacity and the block time as the block frequency. Mathematically, the network's scalability—or maximum throughput—is expressed by the following relationship:
The formula is just for reference only, and I’ve made a more concrete example for you: Given an average transaction size of approximately 0.5 KB, these constraints result in a sustained on-chain throughput of roughly 3.41 TPS. While Wikipedia and other sources suggest a range of 3.3 to 7 TPS, real-world data indicates that during periods of high network activity, the actual confirmed throughput often hovers around 3.5 TPS due to the inclusion of complex multi-input transactions that occupy more space than simple peer-to-peer transfers.
Hardware and Resource Bottlenecks
The constraints on Bitcoin's scalability are not just software limits but are rooted in the physical requirements. Each full node must perform several resource-intensive tasks to maintain the ledger's integrity.
The first physical bottleneck is computational. Verifying a transaction requires cryptographic hashing and ECDSA (Elliptic Curve Digital Signature Algorithm) signature verification, which would even exceed the CPU capacity if the block size were increased by orders of magnitude. The second bottleneck counts network bandwidth. For a node to remain synchronized, it must download and broadcast transaction data and blocks. At a rate of 2,000 TPS (comparable to the Visa network), a node would require approximately 8 megabits per second (Mbps) of sustained bandwidth just to process transaction data, as per Bitcoin wiki.
Let’s look at the table below to see how, at a glance, physical requirements could hinder Bitcoin scalability.
Resource Metric | Legacy Requirement (7 TPS) | Theoretical High-Throughput (2,000 TPS) | Decentralization Impact |
CPU (Signature Validation) | ~0.2% Utilized | ~50% Utilized (Quad-core) | High hardware barriers for nodes. |
Bandwidth | ~28 Kbps | ~8 Mbps | Excludes low-bandwidth regions. |
Storage Growth | ~52 GB per year | ~15 TB per year | High cost of entry for node operators. |
Block Propagation | < 1 second | > 10 seconds (avg) | Increases orphan rate and miner centralization. |
These physical constraints matter because they keep block space scarce—which is exactly what creates the mempool backlog and fee competition during peak demand.
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Mempool & Fee Market (Why fees rise)
When more people want to use Bitcoin than the network can fit into a block, the extra transactions don’t disappear—they queue up in the mempool, the waiting room for unconfirmed transactions. Because block space is scarce (limited by block interval and block weight), miners naturally prioritize the transactions that pay the highest fees.
This is why Bitcoin doesn’t “speed up” during peak demand. Instead, it becomes a block-space auction: users who attach higher fees get confirmed sooner, while low-fee transactions may wait for multiple blocks. In practice, this dynamic is what turns a single-digit TPS limit into real-world UX pain—higher fees and longer confirmation times—especially when many transactions are complex (multi-input) and take more space.
How can we solve those Bitcoin scaling problems?
The Bitcoin community does notice the limitations of the coin’s scalability, and they decided to make changes. However, they did not reach a consensus on that.
Proponents of On-Chain Scaling (Big Blockers)
One part of the Bitcoin community argued that Bitcoin's original vision was a peer-to-peer electronic cash system that should support high-frequency transactions with minimal fees. They proposed increasing the block size limit through a "hard fork," a non-backwards-compatible upgrade, because keeping blocks small would lead to a fee market that would price out regular users.
That’s why we see the Bitcoin Cash (BCH) and Bitcoin SV (BSV).
- Bitcoin Cash (BCH): Launched in August 2017, this fork increased the block size limit initially to 8 MB and later to 32 MB, rejecting SegWit and off-chain scaling as the primary solution.
- Bitcoin SV (BSV): A later fork of Bitcoin Cash that removed the block size limit entirely, seeking to maximize on-chain throughput at the expense of node decentralization.
Proponents of Layered Scaling (Small Blockers)
Opponents of a hard fork argued that the 1 MB limit was vital for network health. They advocated for "off-chain" scaling, where the base layer acts as a secure settlement foundation while most transactions occur on secondary layers. This group favored "soft forks," which are backwards-compatible upgrades that do not split the network. Their preferred solution was Segregated Witness (SegWit), which solved the critical problem of transaction malleability—where transaction IDs could be altered before confirmation—by separating the "witness" data (signatures and unlocking code) from the base transaction data.
SegWit introduced a new metric called "Block Weight" to replace the legacy 1,000,000-byte limit. Under the new rules, a block is limited to 4,000,000 "weight units" (WU). It provides a 75% discount on the space that witness data occupies in a block. Because witness data typically comprises about 60% of a standard transaction, this effectively increased the block capacity without a hard fork.
Different types of Bitcoin layer 2 solutions
Instead of changing the base protocol, they pursued Layer 2 (off-chain) solutions, which allow the network to handle millions of transactions on secondary layers while the main blockchain serves as a secure, immutable settlement layer.
What is The Lightning Network?
The primary strategy for scaling Bitcoin to billions of users involves off-chain protocols, most notably the Lightning Network (LN). Proposed in 2015 and launched on the mainnet in 2018, the Lightning Network is a decentralized system of payment channels that allows for near-instant, low-cost transactions.
A Lightning channel is established when two parties lock a specific amount of Bitcoin into a 2-of-2 multi-signature address on the main blockchain. This "funding transaction" is the only on-chain requirement to open the channel. Once the channel is open, the parties can conduct an unlimited number of transactions off-chain by exchanging pre-signed updates to the balance distribution.
The Lightning Network effectively "breaks" the L1 throughput limit by moving the burden of high-frequency transactions away from the main chain. Payments are settled in milliseconds, as they do not require miner confirmation for every transfer. In theory, the network can support over 1,000,000 transactions per second (TPS), far exceeding the capacity of centralized payment rails like Visa.
Metric | Bitcoin Layer 1 (Base) | Lightning Network (Layer 2) |
Throughput (TPS) | ~7 TPS | ~1,000,000+ TPS |
Confirmation Time | 10 - 60 Minutes | Milliseconds |
Transaction Cost | $1.00 - $10.00+ | Fractions of a cent |
Settlement | Global Consensus | Bilateral / Multi-hop Routing |
Privacy | Public Ledger | Onion Routing (Off-chain) |
However, the Lightning Network faces liquidity management—where nodes must have sufficient "inbound capacity" to receive payments—and the risk of channel closure if a peer becomes unresponsive.
Read more: Bitcoin vs Gold as a Store of Value
What are Sidechains, State Channels, and Rollups?
Besides the Lightning Network, there are three main ways in which Bitcoin L2 solutions address the network’s scalability problem: sidechains, state channels, and rollups. Let’s take a look at each one.
- Sidechains: Sidechains are separate blockchain networks that operate in parallel to the Bitcoin mainnet, connected via a two-way peg. They allow digital assets like BTC to be transferred and used on a chain with different rules, such as faster block times or smart contract functionality, while maintaining value parity.
- State channels: State channels allow specific parties to conduct an unlimited number of transactions off-chain, only broadcasting the initial and final states to the Bitcoin blockchain.
- Rollups: It scales the network by bundling (or "rolling up") hundreds of transactions off-chain into a single summary or cryptographic proof that is then posted to the Bitcoin blockchain. Unlike state channels, which are restricted to fixed participants in a channel, rollups typically function as an open network with their own execution environments. On Bitcoin, rollups are categorized into three main types:
- Optimistic Rollups: These assume all transactions are valid by default. If a transaction is suspected of being fraudulent, anyone can submit a "fraud proof" to challenge it during a specified dispute window.
- Validity (ZK) Rollups: These use advanced zero-knowledge proofs (SNARKs or STARKs) to mathematically prove the correctness of every transaction bundle. Because the proof itself is verified by the network, these rollups do not require a challenge period for finality.
- Sovereign Rollups: In this model, Bitcoin is used only for Data Availability (DA)—storing the transaction data so anyone can reconstruct the state—but the rollup’s own nodes are responsible for determining the validity and settlement of those transactions.
This explainer is published by CryptoThreads, a research-first crypto publication built around one idea: if you understand the mechanics—block space, verification costs, and incentives—you can understand the narratives without the noise. We focus on clear definitions, measurable constraints, and the real trade-offs that shape how networks behave under stress.
Written by Gemma Do, this piece breaks Bitcoin scalability down to its fundamentals: why Layer 1 is intentionally constrained, how mempool congestion turns into a fee market, and why layered scaling (SegWit plus Layer 2 systems like Lightning) is the path that preserves decentralization while expanding everyday usability.
Read more: Bitcoin Energy Use and Network Security
Conclusion: The Path Forward for Bitcoin Scalability
Bitcoin's scalability challenge is not a flaw but a deliberate architectural choice prioritizing security and decentralization over raw throughput. With Layer 1 constrained to approximately 7 TPS due to the 10-minute block time and limited block weight capacity, the network cannot compete with centralized payment systems on the base layer alone. The community's response split into two paths: big blockers pursued on-chain scaling through larger blocks (Bitcoin Cash, Bitcoin SV), while small blockers maintained conservative block sizes and developed Layer 2 infrastructure through SegWit and off-chain solutions.
Today, Layer 2 solutions represent Bitcoin's dominant scaling strategy. The Lightning Network enables over 1 million theoretical TPS with millisecond settlement, while sidechains, state channels, and rollups provide additional scaling options. As Bitcoin matures into 2026, the scalability debate has shifted from "whether" to scale using Layer 2 to "how" to optimize these solutions for mainstream adoption. The fundamental architecture—a secure, decentralized base layer supporting multiple scaling solutions—continues positioning Bitcoin for global adoption without compromising its core values.
Source:
- Bitcoin: A Peer-to-Peer Electronic Cash System (Whitepaper)
https://bitcoin.org/bitcoin.pdf- Bitcoin Wiki – Scalability
https://en.bitcoin.it/wiki/Scalability- BIP141 – Segregated Witness (Consensus layer)
https://github.com/bitcoin/bips/blob/master/bip-0141.mediawiki- The Bitcoin Scalability Problem (Wikipedia — chỉ dùng làm nguồn phụ)
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem- The Bitcoin Lightning Network (whitepaper)
https://lightning.network/lightning-network-paper.pdf
Bitcoin Scalability FAQ (People Also Ask)
Scalability in blockchain means the ability of a network to handle a growing volume of transactions, store data, and reach consensus effectively as more users are added. It is typically measured by throughput (transactions per second) and latency.
