Have you ever wondered why the block size often exceeds the limit of 1MB?

The closer you look at the technical side of bitcoin the more likely you'll realize the block size limit of 1MB. There are several kinds of websites to have a closer look at those blocks - my favourite one is mempool.space, which allows deeper insights. Visiting the link shows you a chain of the latest blocks and most likely there are blocks exceeding the limit. But why's that?

Let me explain.

As you might now a block consists of a set of data and in the case of Bitcoin this data is transactions. Miners keep adding more and more blocks of information about transactions to a database which is often referred as a public ledger. This public ledger holds the entire history of every transaction ever made and is therefore able to show the resulting balances on each address. For a change in the ledger your transaction needs to be added to a block and after it has been mined, the transfer of bitcoin took place.
The capacity of 1MB is more like an upper-limit to the amount of data allowed to be stored in each block. More data means more transactions to be added to the ledger at once. Logically it requires more energy and takes longer to mine those blocks. This becomes a real problem in times where a lot of transactions get sent which leads to hundreds of thousands of unconfirmed transactions.

How do you adapt to those requirements?

The answer is SegWit.

SegWit is a soft fork of Bitcoin which allows the processing of certain data off-chain, in an additional consensus layer. This bypasses the 1MB block size limit.

Imagine a block doesn’t just have a size – but a weight. For SegWit to accept a block, all that matters is that the weight of that block is the equivalent of 1MB. How that is calculated is specific to the inner workings of its code. Essentially, SegWit can take the more cumbersome data away from Bitcoin‘s main chain and store it elsewhere – increasing the overall theoretic block size to somewhere around 4MB.

The idea is if bigger blocks are mined, more transactions are confirmed at once, making the network more efficient. And as technology gets better and better, computational power will increase allowing for even bigger blocks.

The reason 2MB blocks are popping up more often recently is the result of increased SegWit adoption.

Ultimately, a block being mined larger than 1MB is proof that SegWit is functional.

Have a nice weekend.