Mempool Research's Feb. 4 report states that Bitcoin's average block size, currently just above 1.5 MB, could rise to 4 MB with the widespread adoption of inscriptions—methods to encode arbitrary data within a block. Since the Taproot upgrade in 2021, block sizes have steadily increased, with some blocks reaching 2.4 MB. To enhance scalability, higher block sizes are essential, especially as Bitcoin competes with rival blockchains like Solana, which can accommodate up to 128 MB per block. The report outlines various growth scenarios, from slower growth returning to pre-inscription dynamics to accelerated growth with inscriptions driving future capacities. The blockchain could potentially reach a terabyte by late 2026 to mid-2029. The Taproot upgrade also paved the way for more complex activities on Bitcoin, allowing for the creation and trading of tokens and NFTs, increasing its decentralized finance (DeFi) possibilities as institutional adoption grows. However, Bitcoin must overcome competition from networks offering greater block space and lower transaction costs.

Source 🔗