Ethereum processed significantly more transactions than bitcoin yesterday in an historical first. Ethereum processed 308,000 transactions, nearing an all-time high for any digital currency, while the bitcoin network handled just under 270,000.
Part of the reason may be the Status ICO, which raised nearly $100 million in a frenzy that lasted just hours, causing temporary congestion and backlogs for ethereum’s network.
But the more than 300,000 transactions processed yesterday are not a one off occurrence. Ethereum processed 286,000 on June 19th, and just under 300,000 on June the 12th, with the network continuing to make new highs.
Bitcoin’s transaction levels, on the other hand, have been falling, down by 100,000 in just one month, from a peak of 367,000 to 269,000, following a significant increase in fees to above $5 and a sustained backlog for more than a month.
It’s not clear whether there is any correlation between the two as a number of bitcoin businesses have pivoted to eth due to bitcoin’s constant delays of hours to days for one transaction as well as very high fees.
But the bitcoin network appears to have reached agreement on activating segwit through segwit2x, so its capacity may temporarily increase sometime in late summer, early autumn.
The capacity increase would likely be slow and gradual as service providers and bitcoin wallets will need to upgrade their code, with the shift from ordinary transactions to segwit transactions probably taking some time.
After that, the Lightning Network is to launch, which adds another layer of processors and fees. It is likely therefore that throughout the process bitcoin’s capacity will be kept near limits so as to send everyone to the Lightning Network.
For ethereum, the story is a bit different. It can, even as things stand, comfortably handle around 3 times more transactions than it’s currently processing, with the network probably comfortably running with one million transactions or slightly more.
Thereafter, proof of stake is to increase capacity further, while also moving validation to holders, whose incentives may be more aligned than miners which see their gear quickly become worthless, making their incentives more short-term focused.
The Raiden Network, Ethereum’s version of the Lightning Network, is also to launch, with sharding to then follow which will upgrade its capacity to as good as unlimited, especially considering ethereum now has some 30,000 nodes.
Ethereum’s network will therefore likely constantly operate at under capacity, always having room for new transactions throughout the process as far as it can be foreseen and is aimed/planned.
That means the two networks are taking a very different approach as bitcoin plans to always operate at overcapacity for on-chain transactions, while ethereum plans to always have room for more transaction.