The Big Crisis in Bitcoin has sparked an intense discussion around the rising fee rates of the cryptocurrency. With the proliferation of non-fungible token (NFT)-like “inscriptions” and the BRC-20 token standard on Bitcoin, average fees have skyrocketed, making the community quite upset. Not because the fees themselves are high, but because of why they are high.
Bitcoin’s blockchain has always had limited blockspace, posing an open question about its feasibility as the number of users wanting to access it increases. The recent spike in fees is primarily due to more people wanting to use Bitcoin for purposes beyond transactions and wealth storage, such as adding images to the blockchain or participating in token speculation. This surge of new use-cases has fueled heated debate about what Bitcoin should be used for.
In response to high fees, the crypto community has struggled to propose adequate solutions. The most favored solution is Bitcoin’s Lightning Network, allowing fast and cheap transactions. However, to access Layer 2, where the Lightning Network resides, users must first transact on Layer 1 – the main, currently more expensive Bitcoin blockchain. What if fees continue rising, and more people crowd the network making it even more difficult to access?
One potential solution could be third-party custody, wherein an external party can grant access to the Lightning Network without needing to transact on Layer 1. This approach, however, contradicts the principles of Bitcoin, which was created to be a peer-to-peer system free from third-party interference. Nonetheless, custodial solutions might be the most straightforward way to use the Lightning Network, even if it is not the most philosophically sound approach.
The reality is that Bitcoin’s current design probably cannot accommodate the entire world using Layer 1 for onboarding. The difficulty of achieving full self-sovereignty with Bitcoin has given rise to the necessity of trade-offs. Perhaps using Bitcoin in a custodial way is acceptable, provided it allows more people to access and benefit from the cryptocurrency in a manageable way, and subject to clear discussions on options and transparency.
In conclusion, it’s essential to acknowledge that we might have to explore custodial solutions, despite the accompanying unease, to address scalability issues. This openness to discussion and acceptance of trade-offs may guarantee sustainable growth for Bitcoin and its community in the long run, making it truly accessible to everyone interested in using it.
Source: Coindesk
