Blockchain is the ledger in Bitcoin network which records all transaction details. These transactions are registered in 10 minute blocks of 1 megabyte each. The Blockchain grows as the number of blocks increase. New blocks are created each time after the previous block exceeds the block size.
The block size was limited to 1 MB during the initial days of Bitcoin when the number of transactions were less and the Blockchain didn’t have much use apart from recording the transactions. But now, as the number of bitcoins and bitcoin users increase, the number of transactions also rise. Apart from that, Blockchain is used for storing non-transactional data as well. Due to smaller block size, every time there is a transition from one block to another, the transactions will experience delays.
It has now become necessary to increase the block size, in order to optimize the Bitcoin network and also to facilitate Blockchain dependent Bitcoin 2.0 applications. The proposal to increase the block size was put forward by the bitcoin core developer Gavin Andresen. According to the proposal, the block size should be increased from 1 MB to at least 20 MB.
Even though he had a valid argument, it was met with stiff opposition from the bitcoin community especially from those who have mining pools. The decision to increase the block size was put on hold until now.
Recently, a consortium of Chinese bitcoin mining pools — F2pool, BW, BTCChina, Huobi and Antpool have come to a consensus and agreed to increase the block size from 1 MB to 8 MB. These mining groups have issued an agreement with this regard as well. According to the agreement, the block size will double every two years.
Even though the 8 MB block size is nowhere close to the 20 MB block as proposed by Andresen, but apparently he is happy about this move. Now that there seems to be a consensus about the block size, we can probably expect an upgraded Bitcoin network by the end of this year.
The block size was limited to 1 MB during the initial days of Bitcoin when the number of transactions were less and the Blockchain didn’t have much use […]