Nansen has partnered with TRON DAO to integrate the TRON network into Nansen V2, enhancing on-chain analytics for the TRON ecosystem. 

Daily Top Performer — Virtuals Protocol (VIRTUAL)

The S&P 500 climbed 0.4%, driven by a nearly 5% surge in Nvidia shares ahead of its highly anticipated earnings report, which lifted market sentiment despite ongoing geopolitical concerns.  Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 0.15%, with Bitcoin rising by 1.13% and Ether dropping by 1.62%, in the past 24 hours.

Today's top performer is VIRTUAL, which surged 5.2% after the launch of Agentstarter, empowering founders to build successful AI agents with Virtuals Protocol.

Virtuals Protocol (VIRTUAL), founded in 2021, allows users to invest in and co-own AI-driven virtual assets like companions and influencers. Its model fosters community ownership, transforming AI agents into revenue-generating assets across platforms like Roblox and TikTok. The platform attracts contributors from AI and gaming to drive innovation in virtual economies. Virtuals Protocol introduces 

, an AI agent launchpad offering funding, development support, and distribution for creators. It aims to help founders build successful AI agents within a thriving ecosystem and long-term incentive structure.

Check Out the Latest Prices, Charts, and Data of 

 to integrate the TRON network into Nansen V2, enhancing on-chain analytics for the TRON ecosystem. This collaboration aims to provide developers, users, and projects with valuable data to foster growth and innovation. The integration will offer advanced features like Token God Mode, Wallet Profiler, and Smart Alerts, helping optimize decentralized applications (DApps) and improve transparency within the community. TRON’s high-speed, low-cost blockchain infrastructure will benefit from these enhanced analytics to further empower the ecosystem.

Yesterday, total inflows into BTC Spot ETFs amounted to $600.3 million, with $16.2 million coming from GBTC and $584.1 million from non-GBTC sources.

 allows users to earn XP for transactions, quests, gas fees, and referrals in its wallet. XP, while offchain, is tied to wallet addresses and used to level up and unlock exclusive rewards. Key features include free transactions on the ZERϴ Network, daily quests, and retroactive XP for active wallets before mid-October. Rewards enhance the onchain experience but are non-transferable. The program encourages bridging assets to ZERϴ and active participation to maximize XP and rewards.

Beginner

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Nansen Partners with TRON DAO to Enhance On-Chain Analytics for TRON Ecosystem

In our latest Learn 101 livestream session, we gathered an esteemed panel of crypto experts to share insights on the Bybit VIP Program.

The crypto market is highly volatile and moves around the clock, and crypto traders need every advantage available to them. Bybit VIPs have access to a wide range of special tools and features, an amazing community, lower trading fees and other benefits.

, we uncover everything you need to know about Bybit’s VIP Program.

, provides a recap of our Learn 101 livestreams, offering you comprehensive expertise and insights from leading figures in the crypto industry in case you miss the livestream.

Joining the livestream on Nov 14, 2024 were three distinguished guests: Livio Scalet, Bybit VIP; Tradealot, Bybit VIP; and Maxim Orlov, VIP Team Lead at Bybit. Under the moderation of Sabrina Chua, Crypto Evangelist and SEO Editor at Bybit, this episode explores the success stories of our existing VIP traders, the 

 the Bybit VIP Program offers and the way you can become the next 

What's Your Trader Type? Understanding VIP Profiles and Characteristics

Bybit’s VIP program caters to a diverse group of traders, each leveraging their unique strengths and approaches. Maxim, the VIP Team Lead at Bybit, highlights its broad membership, ranging from altcoin enthusiasts and spot traders to long-term investors who prefer to buy and hold.

VIP traders like Livio and Tradealot each adopt distinctive trading strategies tailored to their skills and market conditions. Livio, for example, employs meticulous 

 to refine his strategies, relying on defined entry and exit points and indicator setups. He emphasizes the importance of understanding past market behaviors to anticipate future trends. On the tools front, Livio frequently utilizes Bybit’s 

 and bot strategies to enhance trade precision and efficiency, advocating for copy trading as a beneficial tool for novices to emulate the moves of experienced traders.

Tradealot, on the other hand, focuses on price action rather than traditional indicators. In typical market conditions, he might execute 500 to 600 trades per day, a number that can surge into the thousands when the market heats up. His approach is honed for short-term trading, recognizing that his strength lies in quick, voluminous trading facilitated by Bybit’s reduced fees for VIPs.

 is a critical theme for both traders. Livio approaches trading with a calculated view of risk, opting to increase his trade volume when his strategies show a high success rate. Meanwhile, Tradealot emphasizes the importance of understanding his own trading limitations, especially in volatile markets where poor leverage choices can lead to significant losses.

Community engagement also plays a pivotal role in both traders’ strategies. Each one values the insights and feedback from the Bybit VIP community, which they use as a sounding board to refine their approaches and check their strategies.

Personal trading histories further illustrate their journeys and learning curves. Livio’s turning point came at age 18 after a significant loss that steered him toward mastering risk management and technical analysis. Tradealot’s story began with a modest $600 and a series of early losses that underscored the importance of disciplined trading and risk management.

 not only offers lower trading fees and exclusive events but also fosters a learning environment in which traders can grow and optimize their strategies, drawing on community support and advanced trading tools. Both Livio and Tradealot emphasize the utility of starting with 

 to build confidence and skills in a risk-free environment.

Attaining Bybit VIP status offers a wealth of benefits, tailored to enhance the trading experience significantly. Maxim explains that eligibility for VIP status is determined either by maintaining a minimum account balance of $100,000, or achieving a requisite trade volume. Once VIP status is attained, you gain access to exclusive perks, including dedicated relationship managers available across all time zones, ensuring prompt support whenever needed. Additionally, VIPs enjoy lower transaction fees, enhanced trading features and more lucrative cashback bonuses with the 

The VIP Program also facilitates unique networking opportunities, organizing live events globally for members to connect with peers and industry experts. For those looking to maximize their returns, Bybit offers 

, which are particularly beneficial for VIP members through enhanced terms on investments. 

Livio, though less experienced with Structured Products, is keen to integrate them into his trading strategy. He recognizes the potential these products hold, and plans to explore them further to optimize his investment approach. On the other hand, Tradealot has embraced the use of Bybit's VIP trading bots extensively, leveraging them alongside higher APYs offered through 

 isn’t exclusive to VIPs, he utilizes it and also explores 

, which interfaces seamlessly with several applications he regularly uses.

Tradealot and Livio both share insights on their personal motivations for choosing the Bybit VIP program. Livio cites the lower fees as a crucial factor, enabling him to capitalize profitably on smaller market movements. Tradealot, previously a Binance user, switched to Bybit for its superior platform stability, better fees and higher liquidity, especially under volatile market conditions.

Maxim emphasizes that the journey within the VIP program is progressive, and as members ascend through different VIP levels, they unlock further benefits including higher APYs, exclusive gifts, specialized workshops and access to special events — all coupled with progressively lower fee rates. This tiered system incentivizes and rewards active and high-volume traders, aligning with their evolving trading needs and contributions to the platform.

Unlock the VIP Gateway: How to Join the Elite

Becoming a VIP trader on Bybit is straightforward. It offers two primary pathways: newcomers can opt for a 20-day free trial to experience VIP benefits, and existing VIPs from other platforms can qualify immediately by providing a screenshot of their trading volume or asset balance. For those not meeting these criteria, funding a Bybit account with $100,000 also grants VIP status.

Once established as VIPs, traders such as Livio notice significant changes in their trading approach. For Livio, the ability to capitalize on smaller price movements has become a key advantage, along with access to an engaging trading community, while Tradealot embraces the use of advanced trading bots.

A day in the life of a VIP trader varies, and Livio and Tradealot reflect on their personal routines and trading styles. Livio starts his day gathering information to strategize his morning trades, followed by actual trading in the afternoon. In contrast, Tradealot combines lifestyle activities, such as going to the gym or hiking, with his trading routine. He stays updated with both crypto and global news, ready to trade intensively during volatile market periods.

The VIP Program also includes exclusive trading competitions, as Maxim explains. These competitions not only provide an exciting challenge, but also offer substantial rewards. Winners can expect lavish prizes — such as a gold ring adorned with diamonds during the latest 

 — enhancing the allure of participating in these high-stakes events.

This Learn 101 livestream session offers a comprehensive overview of the Bybit VIP Program, shedding light on the exclusive benefits and features accessible to VIP traders. As a member of the Bybit VIP community, you can enjoy an array of perks, including enhanced features, reduced rates and other advantages designed to elevate your trading experience and maximize your profits. We encourage you to explore the various VIP levels available today to discover how they can enhance your trading journey.

Intermediate

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Learn Live ICYMI: Are You Bybit’s Next VIP?

Aptos (APT) is a scalable Layer 1 blockchain using Move language, offering fast transactions, modular upgrades, and a growing ecosystem of Web3 projects.

Aptos has emerged as a standout in the blockchain space, raising 

 from such venture capitalists as Andreessen Horowitz (a16z), Coinbase Ventures, Apollo, Circle Ventures and Franklin Templeton to build its dream project promising a flexible and upgradeable blockchain structure. It lived up to its promises, with a successful mainnet launch on Oct 12, 2022. 

Two years later, Aptos has surpassed $1 billion in 

 (TVL), an impressive feat showcasing its ability to achieve real-world adoption as it attracts millions of users worldwide.

, giving users improved scalability, reliability, security and usability.

The Aptos genesis occurred on October 12, 2022, with Aptos blockchain's mainnet "Aptos Autumn" launched on October 17, 2022. Aptos is a Layer 1 blockchain built with a Rust-based programming language called Move. Its key features include a parallel execution engine, high-level security features and low transaction costs.

The Aptos blockchain is generating all this hype because of its intriguing past. The blockchain is based on the Diem blockchain initiative (from Meta) that was recently abandoned. Created by Diem developers, the Aptos crypto uses the programming language originally created for Diem. Its focus is on Diem's original goal of creating a scalable, fast blockchain. 

Aptos’s flexible architecture means it can be constantly upgraded to support emerging new use cases as the 

 world becomes increasingly sophisticated. Currently, Aptos is capable of supporting 

 (AI) on its blockchain. Its myriad use cases have drawn over 8 million users worldwide.

The Aptos network was created by Aptos Labs, while the Aptos Foundation focuses on nurturing the ecosystem through grants, education initiatives, events and partnerships.

Aptos Labs is the team behind the Aptos project. They currently lead a diverse team of developers, engineers and strategists headed by co-founders Mo Shaikh and Avery Ching.

Shaikh and Ching met when they worked together on the Diem blockchain project at Meta. Shaikh specializes in scaling products, and has experience in the private equity and venture capital markets. Meanwhile, Ching was one of the principal software engineers at Meta and has led many exciting and innovative development projects in the past. When Meta chose to discontinue the Diem project, Shaikh and Ching decided to join together to create Aptos Labs.

. Besides the Aptos blockchain, Aptos Labs has a range of products that cater to bridging the gap between Web 2.0 and web3. These include 

, a user-friendly web3 wallet that offers seamless access to 

, a name service that allows users to convert their lengthy and complex 

, a dedicated Aptos AI chatbot developed with OpenAI technology.

, whereby token holders stake tokens to their selected validators to help maintain the network. Aptos can theoretically reach 160,000 

 (TPS) while maintaining security and reliability. The following revolutionary concepts are at work behind Aptos's impressive performance.

 creates an engine that efficiently handles 

. The Aptos blockchain engine relies on parallel execution to handle multiple transactions at once. This makes things a lot quicker because a single failed transaction won't halt the whole chain. Instead, transactions can be processed concurrently, and all of them are validated post-execution. To further improve efficiency, a collaborative scheduler works to prioritize certain transactions on the Aptos blockchain and handle essential validations efficiently. Ultimately, up to 160,000 transactions per second (TPS) may be processed simultaneously.

One of the things that makes Aptos’s network so appealing is 

 for swift, secure transactions that was first designed for the Diem blockchain. Move is a type of executable bytecode language that’s used to 

implement smart contracts and custom transactions

. It uses Move modules, which are grouped in upgradeable packages, to define the state of transactions. 

It’s flexible enough to handle the unique needs of Aptos developers, and its global storage is more secure than the average programming language. Move lets users define custom resources that can’t be copied or discarded, making it much more difficult for malicious entities to control the Aptos blockchain. 

Aptos has also made multiple improvements to the Move ecosystem to further enhance its security, such as the 

, a formal verifier for Move smart contracts which boosts protection for contract invariants.

Aptos employs a modular data model, in which a ledger state records the interaction of transactions and accounts. Accounts are representations of users’ control over their assets, from on-chain currency to NFTs, and must be created before they can execute transactions. Transactions submitted by any user modify the ledger state and trigger events coded via Move modules. These events, uniquely identified by keys, are then stored as data within the ledger. This design also ensures flexibility and user privacy, as it supports flexible key management and hybrid custodial options, and allows users to create multiple pseudonymous accounts via cryptographic key pairs.

Byzantine Fault Tolerance (BFT) Consensus Protocol

Instead of using a consensus protocol that has to follow the order of transactions, Aptos decouples the two processes and lets them run parallel to each other. This reduces latency (the time it takes to confirm network transactions) while increasing speed. To ensure accuracy, Aptos has created a Byzantine fault tolerance (BFT) engine that analyzes individual states on-chain and then automatically updates validators as needed.

The Aptos ecosystem is robust, with over 190 projects in the realms of DeFi, GameFi, NFTs, social media, education, AI, infrastructure and more.

. Once an APT holder stakes their APT tokens to a validator node, they’re eligible to vote for various protocol changes, such as blockchain upgrades and changes to blockchain parameters. There was 

 of 1 billion APT tokens, distributed as follows:

 isn’t merely used for governance, as APT token holders can also stake their tokens to a validator to help secure the network while earning rewards, which can be received at 

There’s a minimum stake of 1 million APT and a maximum of 50 million APT, with the staked tokens automatically locked for a fixed duration. The maximum annual reward rate, evaluated at every epoch, began at 7% in 2022, with an annual decline rate of 1.5% (until it eventually reaches 3.25%, which Aptos estimates will take over 50 years). 

To further facilitate decentralization, Aptos also started offering delegated staking for users from April 2023. Delegated staking features a low minimum staking requirement whereby users with as little as 11 APT can collectively stake in a trusted validator node. This move encourages more active participation, allowing more users to stake and earn rewards while helping to sustain a stable and efficient network. 

Staking rewards raise the total supply, making APT an 

 token. However, the rewards mechanism may be modified via on-chain governance.

Aptos is available on Bybit’s Spot market as a swap pair with USDT (

As of Nov 19, 2024, APT’S price is $11.68, which is 41.4% lower than its ATH of $19.92 on Jan 26, 2023 and 279.2% higher than its ATL of $3.08 on Dec 29, 2022. 

Price prediction experts generally have a positive outlook on the APT token. Changelly, while 

 a slight dip to $9.85 in 2025, anticipates APT will exceed $100 by 2030 and hit an astonishing average of $4,727 in 2040. CoinCodex is more conservative in its predictions, 

 APT will trade at an average rate of $31.22 in 2025 and $37.05 in 2030. 

There are several factors working together to make Aptos crypto seem like a great opportunity. First of all, the venture is a continuation of a Meta-founded project that was already getting positive results before it was canceled. Furthermore, the developers working on it are experienced, highly-trained people who've worked on exciting projects in the past.

Aptos’s innovative technology has captured the interest of many venture capitalists, making it one of the top-funded blockchain projects at a total of $350 million (split into two rounds). 

Aptos accepted its first big set of investments in March 2022. Several large venture capital groups, including a16z Crypto, Multicoin Capital, Hashed, Tiger Global, Three Arrows Capital, FTX Ventures and Coinbase Ventures contributed a total of $200 million. Aptos then went on to receive another $150 million in June from FTX Ventures and Jump Crypto. Previous investors, such as a16z crypto and Multicoin Capital, have contributed to multiple rounds of funding.

Thanks to its unique architecture, which separates consensus from execution, and its use of Move as a programming language for added security, Aptos certainly stands out from the crowd of Layer 1 projects. 

In a mere two years, Aptos has achieved a TVL of over $1 billion and attracted over 190 projects, including top DeFi platforms like PancakeSwap, Ondo Finance (the biggest stablecoin by market cap) and USDT.

Aptos has also secured partnerships with industry giants and global asset management leaders, such as BlackRock and Franklin Templeton, and entertainment titan NBCUniversal, further contributing to its credibility as one of the top Layer 1 blockchains.

All of these factors point to a bright future ahead for Aptos. Nevertheless, the crypto market is inherently volatile. As with any other cryptocurrency, before buying APT, please make sure you do 

Aptos, often dubbed the “Solana killer,” possesses plenty of features that help it stand out among other Layer 1 chains — including a highly active community, strong partnerships, and access to unique engines and programming languages. 

One of the Aptos blockchain's main competitors is 

, which is currently the hottest high-performance Layer 1 available. 

Theoretically, Solana can support up to 65,000 TPS, while Aptos is capable of supporting 160,000. While the actual performance of both blockchains falls far below their theoretical speeds, they’re still considered high-speed blockchains, with Solana 

. Apart from their fast speeds, both Aptos and Solana also appeal to many users due to their meager transaction costs, which average around $0.0001 per transaction. 

, having had notable outages and downgrades. Meanwhile, the Aptos blockchain adds redundancy to its network, rendering it less prone to failure. Each block in Aptos is synced with leader nodes and nearby nodes. In case the leader node fails, one of the other nodes can take over. This results in slightly more computational requirements, so Aptos' hardware needs are a little larger than Solana's. Ultimately, Aptos offers more reliability than Solana in exchange for slightly higher hardware requirements.

 use Move programming language, though Sui’s version is modified into an object-centric model, unlike Aptos’s account-centric model. 

Additionally, Aptos records its ledger on a blockchain, whereas Sui stores and organizes its data in a 

Both Aptos and Sui are built to be scalable, with Aptos presenting a high throughput of 160,000 TPS in its testnet days and Sui’s test throughput achieving 120,000. When both networks are launched on the mainnet, however, their maximum throughputs over the past 30 days have fallen to 

While the two networks’ scalability allows for varied use cases, Sui’s focus is on NFT games, with a recent expansion into DeFi. In contrast, Aptos is built to be more general purpose, encompassing a diverse range of applications from DeFi, GameFi and NFTs to social media, entertainment and even AI.

The Aptos blockchain has already managed to outperform 

 in terms of speed. While Ethereum's time to finality is over a minute, Aptos can finalize transactions in less than a second, due to both hardware and design differences. Ethereum only has one CPU core, while Aptos operates on 16.

However, Ethereum’s reliability is undeniably superior. While Aptos doesn't have many problems with outages, it can't compare to Ethereum's stability: Its performance is almost impossible to disrupt. As long as users are fine with paying more fees and waiting longer times, Ethereum still remains the more popular choice.

The Aptos project promises to increase blockchain scalability and reliability. 

Indeed, thanks to its innovative technology, Aptos has proven its credibility in just two short years, drawing over 190 projects to join its ecosystem and enabling it to scale rapidly and evolve to match market demand. 

While it remains to be seen whether Aptos will really be a “Solana killer,” its network is rapidly catching up to Solana’s popularity, as evidenced by its growing ecosystem and partnerships with industry leaders. 

The addition of the world’s largest stablecoin, USDT, to the Aptos blockchain further cements its position as the top blockchain of choice for users and developers seeking a scalable, secure and user-friendly platform. 

With its focus on modularity and upgradeability, Aptos continues to attract significant attention from the web3 community, revealing itself to be a formidable player in the race for blockchain dominance.

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What Is Aptos (APT): A Scalable Modular Layer 1 for Seamless Upgrades

Ethena Foundation has approved the activation of its fee switch, enabling revenue sharing with ENA token holders by the end of the month.

Daily Top Performer — Hedera Hashgraph (HBAR)

The S&P 500 rose 0.39%, rebounding from recent declines, driven by optimism about potential future rate cuts and expectations of a business-friendly administration. Coindesk Indices, an index measuring broader cryptocurrency market performance was up by 0.73%, with Bitcoin and Ethereum rising by 2.16% and 2.81%, respectively in the past 24 hours.

Today's top performer is HBAR, which surged 44.6% following the expansion of Hedera's governance and its advancements in AI data transparency.

Hedera Hashgraph (HBAR), launched on September 2019, is a cryptocurrency network that supports fast transactions and application deployment, overseen by a select group of business-approved nodes. This design ensures quick finality and reliability, attracting major corporations like LG, IBM, and Boeing as participants. Hedera's Governing Council has 

 to 32 members as the platform introduces new features and diverse use cases, such as using immutable records to enhance trust in AI data. The focus remains on transparency, security, and innovation for a promising future.

, enabling revenue sharing with ENA token holders by the end of the month. This move follows a governance vote and has already led to a significant increase in the ENA token's value. Ethena, which has achieved record-high revenues recently, generates income through various yield strategies. As one of the largest DeFi protocols by TVL, Ethena's fee switch could set a significant precedent for revenue sharing in the DeFi space.

Yesterday, BTC Spot ETF flows reached $165.5M, consisting of $5.8M from GBTC and $159.7M from non-GBTC sources.

 to drive onchain growth and reward users for trading NFTs and tokens across chains. With a total supply of 1 billion, over half will be allocated to the community through rewards, staking, and ecosystem development, with an initial 12.5% claim available at the Token Generation Event (TGE). The $ME token will power governance, staking, and user incentives across Bitcoin, Solana, and EVM ecosystems, supporting Magic Eden's goal of creating a universal onchain trading platform. The ME Foundation, a non-profit, will oversee the $ME ecosystem, ensuring security and alignment with community interests while cautioning users to beware of scams ahead of TGE.

Ethena Foundation Approves Fee Switch for Revenue Sharing with ENA Holders

Crypto

Bitcoin

Bitcoin is built upon blockchain. But it has its complexities. Read about Bitcoin and the issue of scalability on the blockchain here.

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Bitcoin is a decentralized electronic cash system that makes peer-to-peer payment possible without going through an intermediary. The original Bitcoin software was developed by Satoshi Nakamoto, released under the MIT license in 2009, following the Bitcoin whitepaper, 

Bitcoin: A Peer-to-Peer Electronic Cash System

. Bitcoin is the first successful implementation of a distributed cryptocurrency. Ten years after Bitcoin was born, as of December 2019, it has about 18 million Bitcoins in circulation and it has reached about a 132 billion 

In Bitcoin, a transaction is a collection of inputs and outputs transferring the ownership of Bitcoins between payer and payee. Inputs instruct the network which coin or coins the payment will draw from. Those coins in the input have to be unspent, which means they have not been used to pay someone else.

Outputs provide the spendable amounts of Bitcoins that the payer agrees to pay to the payees. Once the transaction is made, the outputs become the unspent amounts to the payee; they remain unspent until the current payee pays someone else with the coin.

When, for example, Alice needs to pay Bob 10 BTC, Alice opens her Bitcoin wallet, and scans or copies Bob’s transaction address and creates a transaction with a 10 BTC payment to Bob. Once the transaction is digitally signed and submitted, it is sent to the Bitcoin blockchain network:

Once the transaction is broadcasted to the Bitcoin network, the bookkeeper node, usually a full node in a P2P network that receives the transactions, will validate it according to Bitcoin protocol rules. If the transaction is valid, the bookkeeper will add it to the transaction pool and relay the transaction to the peers in the network. In a Bitcoin network, every 10 minutes, a subset of network nodes, called “mining nodes” or miners, will collect all valid transactions from the transaction pool and create the candidate blocks. They also create a Coinbase transaction for themselves to get rewarded and collect transaction fees, in the event they win the mining race and add the block to the chain, all nodes will verify the new block and add it to their own copy of the blockchain. Magically, Bob will be able to see the payment from Alice and 10 BTC in his wallet.

One of the major concerns in the Bitcoin network, or in general for any PoW-based blockchain is scalability. By design, every transaction has to be verified by all nodes, and it takes about an average of 10 minutes to create a new block with the block size limited to 1 MB. Block size and frequency limitations further constrain the network’s throughput. As a result, a Bitcoin block is able to accommodate around 2700 transactions on average.

With today’s payment systems, VISA is able to handle on average around 2,000 

 (tps), the daily peak rate is around 4,000 tps. Paypal handled an average of 115 tps in late 2014, around 10 million transactions per day.

Clearly, achieving Visa-like capacity on the Bitcoin network isn’t feasible today. To achieve the network’s higher performance and better scalability, it requires increasing the network’s transaction processing limit and making the software enhancements for the Bitcoin network.

There is the blockchain scalability trilemma regarding its capability to address scalability, decentralization, and security, without compromising any of them. The trilemma claims that it is almost impossible to achieve all three properties in a blockchain system.

The following diagram is an illustration of the scalability trilemma in the blockchain:

The key challenge of scalability is finding a way to achieve all three at the base layer. The design choices of Bitcoin favor decentralization and security, while making a sacrifice in scalability.

There are many Bitcoin scalability solution proposals, it can further be divided into On-chain scaling and Off-chain scaling.

On-chain solutions, sometimes also called layer 1 solutions, are to look for solutions to address scalability and performance issues at the base layer of the Bitcoin blockchain network. With on-chain scaling, It refers to the solution of the latency of the network. It provides a way to be able to handle more transactions in the blockchain, Segwit is an example of that by processing more transactions in a block of 1MB. Or just simply by raising the blocksize, as Bitcoin Cash did.

Segwit is a Bitcoin Improvement Proposal number BIP14, it is short for segregated witness, which means to separates the digital signature for the transaction. It was first introduced by Developer Pieter Wiulle at the Scaling Bitcoin conference in December 2015. The purpose of SegWit was to prevent nonintentional Bitcoin transaction malleability, allow optional data transmission, and to bypass certain protocol restrictions.

A Bitcoin transaction comprised of three things: a transaction input, a transaction output, and an amount with digital signatures.

The transaction input is the Bitcoin address from who sent it.

The transaction output is the Bitcoin address to who receives it.

The amount is the amount of Bitcoin that was sent with a digital signature that verifies the sender is eligible to send the coins.

The transaction identifier changes if the digital signature changes. It turns out that Bitcoin’s code allows digital signatures to be altered when a transaction is still unconfirmed. Once a transaction is added to the network, the transaction, including the signature, becomes immutable. The signature alteration is done in a way that if you run a mathematical check on it, it is still valid by the network. However, when you run a hashing algorithm on it, it gives a different result.

Previous tx: p9k5ee39a430901c91a5917b9f2dc19d6d1a0e9cea205b009ca73dd04470b9a6

scriptSig: 304502206e21798a42fae0e854281abd38bacd1aeed3ee3738d9e1446618c4571d10

90db022100e2ac980643b0b82c0e88ffdfec6b64e3e6ba35e7ba5fdd7d5d6cc8d25c6b241501

scriptPubKey: OP_DUP OP_HASH160 201371705fa9bd789a2fcd52d2c580b65d35549d

The input in this transaction imports 20 BTC from output #0 in transaction p9k5e… Then the output sends 20 BTC to a Bitcoin address (expressed here in hexadecimal 2013… instead of the normal base58). When the recipient wants to spend this money, he will reference output #0 of this transaction in an input of his own transaction.

• Previous tx — an identifier of the previous transaction to the address A;

• Index — input number (here we have only one input number 0);

• scriptSig — first part of the validation script (contains a transaction signature);

• Value — the number of Bitcoins to send in satoshi (one bitcoin = 100 millions satoshi) — 20 bitcoins in the example;

• scriptPubKey — second part of the validation script, which also contains the receiver address B.

To verify that one can spend the amount of the previous transaction, it needs to check combine the scriptSig of a new transaction with the scriptPubKey of the previous transaction, to make sure the result is true and valid.  scriptPubKey simply checks the equality of the public key and the validity of the signature – OP_CHECKSIG

In a Bitcoin transaction, txid is a sha256d hash of all the fields of the transaction data. The value of txid depends on scriptSig.

During a mining node process transaction, the node can mutate scriptSig that the signature will stay valid, the transaction will have the same effect, but txid will change.

For example, one can add a OP_NOP operation (that does nothing). Or for some sophistication, one can add two operations: OP_DUP OP_DROP (the first one is duplicating the signature on the stack, and the second one removes it again). The signature is still valid, but txid changes.

Another example like signature value was “3”, but we can change it to “03” or “3+7-7”. Mathematically, it’s still the transaction value with a valid signature, but there are different hash results since hashing depends on how you write the value and not the value itself.

 for an existing transaction can be problematic for a number of reasons:

If you want to build second layer solutions on top of the Bitcoin network, like the network, you need to make sure no one can alter the first layer since it relays on it.

Modifying txid can cause issues if you’re spending or accepting unconfirmed funds.

In SegWit, all the malleable information is separate from the transaction into a separate “witness data”. When computing txid, it will not include this malleable information, in this case, the identifier will never be able to change, the problems will be fixed. Here is an Segwit transaction output example:

0014a4b4ca48de0b3fffc15404a1acdc8dbaae226955

30450221008604ef8f6d8afa892dee0f31259b6ce02dd70c545cfcfed8148179971876c54a022076d771d6e91bed212783c9b06e0de600fab2d518fad6f15a2b191d7fbd262a3e01

039d25ab79f41f75ceaf882411fd41fa670a4c672c23ffaf0e361a969cde0692e8

We can see that there is witness information, the data include all the malleable information. Sigscript have much less hash information compared to the previous example without the Segwit transaction. This also means it reduces a Bitcoin transaction size and improves transaction speeds by removing the witness data from the original portion and appending it as a separate structure at the end.

Node performance – The transaction size is reduced, the Bitcoin network is less congested so that nodes can verify blocks, or transactions, quicker.

Transaction malleability – As we discussed, with Segwit,  the signature moved from the transaction data to a witness data block. Transaction id (txid) is immutable and protects transaction data from being hacked.

Linear scaling of signature hashing operations – By reducing transaction size, we can add more transaction data for a certain transaction as a batch. Segwit separates transaction signatures out from transaction data so that each byte of a transaction only needs to be hashed no more than twice.

Increased security for multi-signature transactions – SegWit provides two different scripts; one to a public key and another directs payments to a script hash. With combine these scripts, Segwit boosts security by enabling a multi-signature transaction.

Building on top – SegWit is great for the Bitcoin development of second layer protocols, like its lightning network. SegWit activation also boosted development work on other features such as MAST (which enables more complex Bitcoin smart contracts), Schnorr signatures (which would enable another transaction capacity boost) and TumbleBit (an anonymous top-layer network).

Protects Lightning Network – Lightning Network Micropayment channels rely on double-signed transactions to lock the initial deposits. To start a Lightning Network payment, the funds from both parties are sent to one double-signed address. To prevent cheating, the transaction should be double-signed before any funds are actually sent there. Both parties need to synced to collect the outputs of transactions from to the main blockchain. This required transaction id is immutable, that is where SegWit comes to the rescue.

SegWit, in theory, can double Bitcoin’s throughput to approximately six TPS. While it is very important for Bitcoin network improvement, but this theoretical doubling of transaction throughput still remains too low for mainstream use of Bitcoin as a payment system.

Another proposal to improve Bitcoin’s scalability on-chain is to increase the block size. The idea is superficially simple: increasing the block size from today’s 1 MB to, for example, 8 MB would increase transaction throughput eight-fold. Some of the altcoins, like Bitcoin Cash. The BCH blocks were initially 8MB, currently a BCH block is at 32MB. This is similar to the vertical scaling approach to add more transactions in one block. However, Increasing the block size means blockchain can be many times larger and that would require better computing capacity in order to process large-sized blocks. At the same time, this would decrease the security of the network to some extent due to the decrease of effective honest hash power. This may also lead to a scenario where a network is concentrated into a few rich hands and, thus, may ultimately compromise decentralization and security, the main tenets of the blockchain.

One is security concerns. It is a common belief that the network is more secure if more network nodes participate in transaction processing in the blockchain. With the wider distribution of altcoin chains, fewer nodes will operate on any given blockchain. This may make the blockchain less secure, since a smaller altcoin network may be more vulnerable to network attacks. Let us say, we have about 10,000 nodes on the larger network, it will require at least 5,001 nodes (or called 51%) to be compromised to launch an attack on the network. If we slice 10,000 nodes into 50 smaller chains, each chain comprises 200 nodes, and it only requires 101 nodes to take down any smaller chain, which is what we call a 1% attack problem. Another issue is cross-chain integration. Although there are some solutions for handling cross-blockchain integration, the overall complexity of integrating smaller chains and altcoins will increase drastically.

Segwit2x was a proposed compromise to the block size debate back in 2017. It suggested that Segwit will be activated as a first step, and after that, the block size will be increased to 2mb. This proposal was not accepted by the majority of the Bitcoin network.

Similar to the rationales for an on-chain solution, the Bitcoin community is also actively looking for off-chain solutions, sometimes called layer 2 solutions. In off-chain scaling, the solution is to build extra layers on top of the Bitcoin blockchain and to do process all kinds of transactions with two participants. These transactions could then be batched and sent as one transaction on the blockchain. One of these off-chain solutions is called the Lighting network.

Bitcoin Blockchain Performance and Scalability

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