Binance: Bitcoin has a scalability issue, but there’s hope in solutions
Bitcoin’s ecosystem is changing due to new tech and high fees, demanding scalability solutions. Recent findings from Binance stress the pressing need to tackle Bitcoin’s scalability challenges.
Bitcoin’s ecosystem is changing because of new technologies and rising transaction fees. It is getting clearer that Bitcoin has a scalability issue. Innovations in the ecosystem, highlighted in a recent report from Binance, reveal an urgent need to address Bitcoin’s (BTC) scalability issues.
BTC scalability compared to Ethereum
Ethereum (ETH) is valued at $450 billion, with $45 billion in total value locked (TVL) across its Layer-2 (L2) solutions, representing about 10% of its total value, per the report.
In contrast, Bitcoin, with a market cap of $1.4 trillion, only has $2 billion in L2 TVL, just 0.13% of its total value.
This highlights how Bitcoin needs to catch up in adopting effective Layer 2 solutions, which is crucial for enhancing its scalability. Addressing these scalability issues is urgent to ensure Bitcoin’s continued growth and usability in the face of increasing transaction volumes.
Projects like Ordinals, Inscriptions, BRC-20 tokens, and Runes show demand for these features. As a result, the average transaction fees for BTC have increased from $1.5 in 2022 to $9.5 in 2024, indicating the network’s increased usage and limitations.
Binance’s considerations for Bitcoin’s scalability
According to the report, helping and fixing Bitcoin’s scalability solutions involves addressing several things, such as trustless two-way bridges, which should ensure seamless and secure asset transfer between layers without intermediaries.
