Cardano Grows Block Size by 11% to Meet Scaling Challenges

Key Takeaways

  • Cardano is increasing its block size from 72KB to 80KB. Plutus script memory units will also get a bump.
  • The updates are set to ship this Friday.
  • Cardano is aiming to become more scalable this year in a bid to catch up with its Layer 1 competitors.

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Cardano’s core development team, Input Output, will increase the network block size by 11%. The team has also planned a memory boost for its smart contract platform, Plutus.

Cardano Aims to Address Scaling Issues 

Cardano is increasing its block size.

In a Wednesday update posted on Twitter, Input Output reported that it would be expanding Cardano’s block size from 72KB to 80KB. Block size refers to the maximum data capacity a single block can have on a blockchain. A larger block size allows for more transactions to be added to new blocks, thereby improving scalability.

In addition to a bump in block size, the team has also planned improvements in the performance of Plutus, Cardano’s execution platform for deploying smart contracts. The team revealed that Plutus script memory units will be scaled from 12.5 million to 14 million. Expanded memory limits are expected to grow Plutus smart contracts’ ability to process more data items.

The Input Output team said that the updates would “provide additional resources for Plutus scripts to improve dApp user experience while increasing overall network capacity.”

The two improvements are slated to go live this Friday at 21:44 UTC.

In launching the upgrade, Input Output is placing hopes on Cardano’s ability to overcome its congestion issues. Notably, Input Output launched similar updates to both the block size and Plutus memory units in November 2021.

Cardano’s first decentralized exchange, SundaeSwap, suffered a rocky launch when users reported reported that high congestion was preventing them from executing token swaps. In the tweet storm announcing the updates, Input Output warned that there may still be “significant load” on the network during anticipated launches of new dApps and NFT mints. Cardano’s founder Charles Hoskinson has previously stated that the blockchain could become a hub for both DeFi and NFTs, but the network has some way to go to catch up with its competitors.

Throughout 2022, Input Output is planning to continue optimizing Cardano as part of the “Basho” scaling phase. With that, Cardano will be hoping to grab market share from Ethereum and the various other Layer 1 networks that dominated the cryptosphere in 2021.

Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies. 

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Cardano Increases Block Size By 12.5%, What This Means

Cardano has been making important changes to its blockchain since the launch of smart contracts capability. This had brought with it an increased usage and thus needed to be more scalable to accommodate this increase. Since the launch in September, there have been a number of improvements to the network and the latest is the increase in the block size.

Increased Block Size In Cardano

Cardano, in a recent blog post, announced that they were increasing block size by 12.5% to make room for the increased traffic that is expected on the network. The 8KB increase will see the total block size now at 72KB and will allow more transactions to be fitted in a single block. This will allow more transactions to be processed per second, greater data throughput, in turn providing greater capacity for its users.

Related Reading | Cardano Founder Says Metaverse Is Important For Crypto

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Keep in mind that a year ago, Cardano only averaged 10,000 transactions per day. Now, a year later, this number has risen significantly to more than 200,000 and climbing. A 12.5% increase in block size may not seem large by the average margin but is important to accommodate for this increased usage.

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Another factor that warrants the increase in block size is the anticipation of DApps that are expected to launch on the blockchain soon. Since Cardano already has smart contracts capability, it is only a matter of time until developers begin deploying their apps. This anticipated rise in traffic has made increasing block size important for the network.

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Plutus Script Memory Gets A Boost

Block size was not the only thing that got a boost. Cardano also increased Plutus script memory units by transaction. In another 12.5% expansion, the Plutus script memory units per transaction is now 11.25 million.

In the blog post, John Woods, Director of Cardano Architecture, explained that this change was brought about due to growing demand from developers. It will help developers in their journey as they test and deploy their DApps on Cardano.

“An increase in Plutus memory limits means that they can develop more sophisticated Plutus scripts, or that existing scripts will be able to process more data items, increase concurrency, or otherwise expand their capabilities.”

Woods notes that this is only a first in a series of changes that will take place to expand the real-world capabilities of Plutus scripts.

Related Reading | Cardano Founder Reiterates Long-Term Purpose Amid Sell-Off Panic

The changes in block size and Plutus script memory units by transactions will be implemented slowly. Cardano has adopted a ‘slow and steady’ mechanism going forward with the changes. Although this may look to be moving too slow for some, a 12.5% increase shows that the developer is not rushing to make changes that would adversely affect the network.

“It’s not just about creating more complex scripts. It’s also about putting more data through,” the blog post read.

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What Elon Musk Got Wrong About The Bitcoin Block Size

At “The B Word” conference earlier in the summer, there was a memorable panel event with Elon Musk, Cathy Wood and Jack Dorsey in which we were able to ascertain a little more (than we had often seen in tweets) about Elon Musk’s Bitcoin views. This article is an attempt to dissect and evaluate what he said around Bitcoin’s block size.

Firstly, let’s review what was said (starts at 18:15):

Steve Lee (panel host) – “Elon, I’m curious for your opinion on this – you mentioned, earlier about the importance of throughput, maybe some concerns around bitcoin. Do you think bitcoin can become peer-to-peer cash?”

Elon Musk – “Well, Bitcoin does have a fundamental scarcity limit at the base layer, that’s designed in; that doesn’t mean you can’t have some Layer 2 solution, like Lightning – I understand Lightning is doing well in some small countries.

“There is some question mark as to whether you’d need a money transmitter license, just a debate as to whether that is needed, that it is not open ledger; that’s a whole separate debate, of course.

“But Bitcoin by itself simply can’t scale to be the monetary system for the world at base layer. At a second layer, this is possible — it would depend on how that second layer is implemented.

“That’s part of why I think there may be some merit to, er, – something that may seem silly – like Dogecoin.. the three things I own outside from SpaceX and Tesla ..of any significance are bitcoin by far, and some eth and some doge. If the price of bitcoin goes down I lose money.. I might pump but I don’t dump. So it’s not a case of.. I don’t believe in getting the price high and selling or anything like that ..I would like to see bitcoin succeed.

“I think there’s some merit to – this is not a slam on Bitcoin – there is some merit to considering something that has a higher max transaction rate, and lower transaction cost – kind of seeing how far you can take a single layer network, where the exchanges act as a de facto second layer. I think you can probably take that further than people realise, and as bandwidth increases over time, latency decreases… Space X and Starlink are actually playing a role in this, and I think long term people probably have access to – worldwide access to – gigabit level connectivity at low latency, at low cost. And so then your base layer could do a lot of transactions if you take that into account.

“But as I said, Bitcoin with the Layer 2 system, I still think, could scale to do a vast number of transactions – the same goes for Ethereum.”

Steve Lee – “The question about the scaling of the Layer 1 — the concern from the past five years of debate in the Bitcoin community — is that that would sacrifice too much decentralisation, and hurt the censorship-resistant properties of bitcoin. I’m curious, what are your thoughts – are you sensitive to that, are you concerned about losing some of the special properties of bitcoin or another cryptocurrency by scaling at Layer 1?”

Elon Musk – “Yeah, with these things it’s helpful to use the physics tools of thinking; you know scale up, scale down, and see if it still makes sense. So if scaling up the transaction block doesn’t make sense, why don’t you scale it down? And have it be so somebody, you know, with a laptop from 2008 can still run a Bitcoin node. Why not slow it down. Oh. You want to slow it down? Well, maybe you’re at the wrong number then (laughs).”

Steve Lee – “There are actually members of the community who do want to slow it down!”

Elon Musk – “It’s silly. The reality is, the average person is not going to run a bitcoin node. And — Bitcoin — a lot of clever ideas, but these parameters were set in 2008, or 2009. There have been some improvements since then, but not a lot. You know, in 2008 there were still a non trivial number of people on modems (laughs)… nowadays it is quite common to get a 100mbs connection just for a house – some houses have gigabit connections… and that trend is obviously in the direction of higher bandwidth and lower latency. And if somebody else doesn’t do it, Starlink certainly will, so I have high confidence you would be able to maintain a decentralised finance system whilst still having a much bigger blockchain.. A.k.a. ASCIItext ledger, a hash ledger – you can make the hash ledger bigger, without harming decentralisation, as the average connectivity improves, obviously.”

Seasoned Bitcoiners will have rolled their eyes at these comments, with the block-size war (read the excellent book by Jonathan Bier of the same name) around 2015-17 still a recent memory. However, dissecting the comments remains key to an understanding of bitcoin’s unique value, versus other cryptocurrencies.

In some respects, Elon Musk has a point. If Bitcoin were developed for the first time today, it might not have been given the same parameters as it has had since its outset. Elon Musk is a visionary in other fields, and it’s only natural that a character like him might ask what might be, as opposed to accepting what is. However, before you go searching for the most viable alternative altcoin to back which has bigger blocks, it’s worth considering that Bitcoin probably could have been established at outset with half the current block size, or double the block size, and still been in a similar position as it is today. Much in the same vein, and a more trivial example – was 21 million coins the right number to choose?

How so? One anecdote I’d highlight to describe the position Bitcoin is in is the plug socket analogy used by Robert Breedlove (and no doubt others) to describe Bitcoin’s inaugural, first-mover lead over others. There may be better plug socket designs out there now, but entire nations are not going to shift designs for all sockets and appliances unless there is a 10x advantage to be derived from the new one.

The fact is, Bitcoin has a near-unassailable lead in terms of security of the network, nodes, users, and the surrounding ecosystem. I’d recommend a read of Nic Carter’s article on settlement assurance which much better articulates this.

At the heart of the argument also lies the whole concept of digital scarcity, upon which bitcoin derives most of its value. If any other cryptocurrency overcomes bitcoin, what is to stop the next incumbent from in turn overcoming it? This for me would cast doubts over the existence of any meaningful digital scarcity, and hence store of value potential, from any cryptocurrency at all. This could still turn out to be the case, but it doesn’t lead us to doge.

I’d disagree slightly with Elon Musk’s assertion that the average person is never going to run a Bitcoin node; as might Umbrel, who have just this week unveiled an “out of the box” solution for doing so. The market will no doubt drive this cost down significantly over time and make it easier still. As bitcoin adoption increases, it would be healthy to see far more nodes running than there are now. As fellow Bitcoin Magazine contributor Mitch Klee has tweeted, it’s not inconceivable that smartphones could have capacity to store the Bitcoin blockchain and run a node in future. Shinobi has pointed out in turn that there may be bottlenecks here – CPU / RAM / data plans, for example. But one thing’s for sure – with a fixed block size the number of nodes should increase over time, which is healthy and arguably necessary for the network.

In summary, whilst Elon Musk was right to point out that larger block sizes may appear more desirable now and into the future on paper, any advantage gained here versus Bitcoin in its current form is slender, and unlikely to be selected by the market compared to Bitcoin’s existing and wholly unique properties.

Does Elon Musk ultimately recognise this? On the basis that actions speak louder than words (and his actions so far this year have been to buy and hold quite a large amount of bitcoin), I wouldn’t rule it out. Time will tell.

This is a guest post by BitcoinActuary. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.


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