The cryptocurrency industry saw significant developments in 2024, with Bitcoin reaching new levels of stability and stablecoins surpassing traditional payment giants in transaction volume. A report by ARK Invest highlighted Bitcoin’s declining volatility and the rapid growth of spot Bitcoin ETFs, while research from Mempool suggested that the adoption of inscriptions could drive Bitcoin’s average block size to 4MB. As regulatory discussions around stablecoins gained traction in Congress, the evolving digital asset landscape signaled a shift toward broader institutional adoption and increased blockchain utility.
Bitcoin’s Block Size Could Reach 4MB Amid Widespread Inscriptions Adoption, Mempool Research Reports
The Bitcoin network could see its average block size grow significantly, potentially reaching 4 megabytes (MB) per block, as inscriptions gain wider adoption, according to a new report published by Mempool Research on Feb. 4. This represents a substantial increase from the current average block size of just over 1.5 MB.
The findings highlight the potential scalability implications of inscriptions—a method that efficiently encodes arbitrary data within Bitcoin blocks. If widely adopted, these inscriptions could push Bitcoin’s total blockchain size to 1 terabyte (TB) as early as 2026, though Mempool Research estimates a more likely timeframe between 2027 and 2029.
Bitcoin’s block size has been a hotly debated topic in the cryptocurrency space for years. Larger block sizes allow more data to be stored per block, increasing the network’s ability to process transactions. However, they also pose scalability challenges, as more storage and bandwidth are required to maintain a full node.
Currently, Bitcoin blocks are limited to 4 MB of raw data, with most blocks averaging around 1.5 MB. However, since the 2021 Taproot upgrade, some blocks have stored as much as 2.4 MB of data. Taproot’s implementation enabled more efficient transaction encoding, leading to increased usage of Bitcoin’s block space for novel applications such as inscriptions.
Mempool Research’s report outlines two key scenarios:
A return to pre-inscription dynamics, resulting in slower block size growth.
A future with widespread adoption of inscriptions, which could push average block sizes toward 4 MB.
With larger block sizes, Bitcoin’s total blockchain could surpass 1 TB within a few years, requiring significant storage capacity for full node operators.
Bitcoin’s block size limitations contrast starkly with newer blockchain networks like Solana, which can theoretically store up to 128 MB per block, according to the Solana Foundation. This massive difference allows Solana to process thousands of transactions per second, while Bitcoin remains constrained by its 10-minute block time and relatively smaller block capacity.
The competition from high-performance blockchains like Solana sheds light on Bitcoin’s challenges in maintaining its dominance as both a store of value and a functional transaction network. However, Bitcoin’s unparalleled security and decentralization remain key advantages.
The Role of Taproot and Bitcoin DeFi in Scaling the Network
Bitcoin’s Taproot upgrade laid the groundwork for innovations in smart contracts, inscriptions, and Bitcoin-native decentralized finance (DeFi). While Bitcoin was originally designed as a peer-to-peer payment system, its ecosystem has evolved, now supporting NFTs, layer-2 solutions, and other DeFi applications.
Industry experts predict that Bitcoin-native DeFi will be a major theme in 2025, with institutions increasingly interested in Bitcoin as a programmable asset. Platforms built on Bitcoin’s network, such as Stacks and RSK, are enabling DeFi functionalities while benefiting from Bitcoin’s security.
However, Bitcoin still faces competition from networks that offer far greater block space and lower transaction costs. In September 2023, Celestia—a layer-1 network specializing in data availability—announced a roadmap aiming to scale its block size to an unprecedented 1 gigabyte. If successful, this could create new challenges for Bitcoin’s long-term competitiveness.
As the Bitcoin ecosystem evolves, the network must balance scalability, security, and decentralization. While larger block sizes can increase transaction capacity, they also introduce new trade-offs, such as increased storage requirements for node operators and potentially higher fees.
The Mempool Research report suggests that widespread adoption of inscriptions could drive Bitcoin into a new era of growth, pushing its blockchain storage requirements beyond previous expectations. Whether Bitcoin will fully embrace these advancements or remain constrained by its original design remains a topic of debate within the community.
With institutions increasingly integrating Bitcoin into their portfolios and the rise of Bitcoin-native DeFi, the network’s ability to scale will be a defining factor in its future success.
Bitcoin and Stablecoins Dominate 2024 as Digital Assets Enter a New Era: ARK Invest Report
2024 was a landmark period for digital assets, with Bitcoin achieving historic stability and stablecoin transaction values surpassing those of financial giants Visa and Mastercard. These insights are part of ARK Invest’s recently released Big Ideas 2025 report, which outlines key trends and developments in the cryptocurrency space.
According to the report, Bitcoin’s annualized volatility fell below 50% in 2024—a record low for the leading digital asset. This marked a sharp contrast to previous years when Bitcoin’s volatility hovered around 80% in 2022 and exceeded 100% in 2018. Alongside reduced volatility, Bitcoin delivered a stellar 122.2% return in 2024, reinforcing its growing status as a reliable investment vehicle.
A major factor behind Bitcoin’s success in 2024 was the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States. Approved in January, these ETFs marked the “most successful ETF launch in history,” according to ARK Invest.
By the end of the year, US spot Bitcoin ETFs had accumulated over $100 billion in net assets, demonstrating strong institutional demand. The introduction of these ETFs provided traditional investors with a regulated and accessible means of gaining exposure to Bitcoin, which played a pivotal role in stabilizing the asset’s price movements.
Another key milestone was Bitcoin’s inflation rate falling to 0.9% after its quadrennial halving event in April. For the first time in history, Bitcoin’s issuance rate dipped below that of gold’s long-term supply growth, reinforcing its status as ”digital gold” and a hedge against inflation.
While Bitcoin solidified its position as a store of value, stablecoins emerged as a dominant use case for blockchain technology. ARK Invest’s report highlights that stablecoin transactions reached an annualized value of $15.6 trillion in 2024—equivalent to 119% of Visa’s transaction volume and 200% of Mastercard’s.
Stablecoin adoption also saw a massive surge in transaction volume, hitting 110 million transactions per month. Although this still represents a small fraction of Visa’s and Mastercard’s transaction count (0.41% and 0.72%, respectively), the value per transaction was significantly higher than those processed by traditional payment networks.
The rapid growth of stablecoins has been driven by their low transaction costs, fast settlement speeds, and increasing regulatory clarity, making them an essential tool for cross-border payments, remittances, and on-chain transactions.
Regulatory Landscape: Stablecoin Framework Gains Momentum
As stablecoins gained prominence, US lawmakers ramped up efforts to establish a clear regulatory framework for these digital assets. Stablecoin regulation became a top priority for pro-crypto Republicans in Congress, with multiple legislative proposals introduced throughout the year.
Before the November 2024 presidential election, Senator Bill Hagerty introduced the Clarity for Payment Stablecoins Act of 2024, building on previous proposals by former House member Patrick McHenry. Earlier in the year, bipartisan efforts were also evident, as Senators Kirsten Gillibrand (D) and Cynthia Lummis (R) introduced a bill aiming to create a comprehensive regulatory framework for stablecoins.
Following the Republican Party’s sweep of both houses of Congress in November, passing legislation to clarify crypto market structure and stablecoin regulations became a top priority. Republican Representative Tom Emmer emphasized that regulatory clarity would be critical for fostering innovation and maintaining the US’s leadership in financial technology.
Miller Whitehouse-Levine, head of the DeFi Education Fund, told Bloomberg that there is now broad bipartisan consensus in Congress regarding stablecoin regulation. With stablecoins playing an increasingly critical role in the global economy, lawmakers are under growing pressure to balance innovation with consumer protection.
As the crypto industry goes into 2025, Bitcoin and stablecoins appear poised to dominate the next wave of digital asset adoption. The success of Bitcoin ETFs, the network’s declining volatility, and stablecoins surpassing traditional payment giants signal that blockchain-based finance is moving toward mainstream acceptance.
Looking ahead, several key developments will shape the industry:
Bitcoin’s halving effects: With the April 2024 halving reducing new Bitcoin issuance, supply constraints could drive further price appreciation.
Stablecoin regulation: The implementation of clear US stablecoin regulations could accelerate adoption and institutional use cases.
Decentralized finance (DeFi) growth: The maturation of Bitcoin-native DeFi and increasing integration of stablecoins into financial systems could unlock new blockchain applications.
With the combination of growing institutional adoption, a more favorable regulatory environment, and technological advancements, 2025 is set to be another transformative year for digital assets.
This article was originally Posted on Coinpaper.com
