The Bitcoin mempool, or memory pool, is a necessary addition to the ecosystem due to a minor error introduced during the project’s development. These include the differences between transaction demand and processing capacity that can lead to lost transactions and network congestion. Since blocks are produced only every 10 minutes, the demand for continuous transactions puts pressure on the ecosystem to handle a timing mismatch.
Bitcoin network congestion can occur at any time, but it is especially concerning when the Bitcoin price skyrockets, as investing and trading are flourishing. Unfortunately, this also triggers a significant increase in fees and slower confirmation times, which can occur even after making predictions.
Luckily, Bitcoin has found several ways to address network congestion, but the mempool is by far the most efficient. Let’s learn more about it.
How does a mempool entry affect the efficiency of a transaction?
The purpose of the mempool is to ensure that their transactions are processed time-efficiently. So, when a person sends BTC from their wallet, it creates the transaction details, and the private key signs it to broadcast it to the network. After that, the transaction must be verified to prevent double-spending.
The next step involves the mempool entry, during which miners select a transaction. This step can take a few minutes or a few days, depending on network conditions and fees that can hinder miner activity. At the same time, miners choose their transactions based on the fees so they can earn more from mining. After they complete the block, the transaction is removed from the mempool and officially enters the network.
The mempool sorts out conflicting transactions
The mempool is also known as the waiting room since transactions are waiting here to be managed. For example, it might happen that users spend the same number of bitcoins on different sides of the network, and nodes can address this by receiving the transaction separately.
The solution is documented only on the blockchain, according to the guidelines. Therefore, miners add one block to the blockchain while eliminating conflicting transactions by operating a sorting mechanism. Transactions will move from temporary storage, which is the memory pool, to the permanent storage in the blockchain, and an efficient system that has prevented numerous unpleasant situations from occurring.
Do other blockchains have their mempools?
Bitcoin is not the only ledger to use a mempool, but it is the first to implement such an innovative feature. Ethereum, for example, uses the mempool for transactions to compete for inclusion in blocks with the help of:
- Smart contracts interacting and creating complex transactions;
- MEV (Maximum Extractable Value) for miners to raise their profits;
- Arbitrage opportunities for pending transactions;
Solana, on the other hand, takes a different approach, ditching mempool technology in favor of optimized transaction throughput. This means transactions are sent directly to the current block leader, ensuring faster processing with minimal wait time. Other blockchains have their mempool variations, from Polygon’s mempool-based transaction ordering to Arbitrum’s batch transaction processing.
How bad can blockchain congestion get?
Some may think of network congestion as similar to a slow website, but it has considerable consequences on the efficiency of the blockchain. For now, it is impossible for blocks and blockchains to safely store an unlimited amount of data, which is why blocks have a limited capacity for transactions. When blocks are overwhelmed, they contribute to network congestion, which impacts the ledger’s performance.
Some of the main causes of congestion include, besides the growing number of transactions:
- The technical network structure;
- The block size available at creation;
- The block creation times;
Even the mempool can become congested when transaction demand exceeds capacity. When the network cannot handle any more requests, transaction processing will take too long, and queues will form, leading to consequences.
What happens when a blockchain is congested?
One of the most prominent events leading to massive network congestion occurred during China’s crackdown in 2021, when the government’s high-pressure policies severely affected Bitcoin mining and trading, increasing block creation from 10 minutes to 20 minutes, triggering high transaction fees and a slow network.
Therefore, network congestion can happen at any time when the right causes align and lead to:
- Higher transaction fees for users, so they can pay more in fees than the actual transaction;
- Longer transaction approval times that offer a poor user experience;
- A delay in efficiency for the future use of the network;
What are other solutions to preventing and managing network congestion?
Besides the mempools solution, blockchain has approached and adapted varied technologies, such as the following:
- Sharding: This is a method in which the blockchain is divided into smaller pieces to better handle an increasing number of transactions. while this increases the network capacity, it might interfere with its safety due to growing complexity;
- Layer-2 solutions: These technologies offload transactions to a second blockchain, allowing the first to operate more efficiently. They help improve performance with more transactions;
- Block reduction times: Approving the transactions faster is possible by shortening the block times, but this must be done carefully, otherwise risks of vulnerabilities may appear;
Another proposed solution is increasing the block size on blockchains, which allows more transactions to pass verification. Still, more blocks require more storage, which can be difficult to supply in massive networks. Several projects are seeking to increase storage while securing the network, such as Solana’s Xandeum, which supports data-intensive applications on the blockchain.
Final considerations
The Bitcoin mempool is necessary for the blockchain to support a large number of transactions while maintaining safety and efficiency. The mempool is a temporary space where transactions wait until miners include them in blocks, after which the transactions are verified and added to the main blockchain. The solution prevents congestion, one of the biggest problems the decentralized ecosystem faces, as it boosts transaction fees and significantly slows processing time. Congestion can also cause overall efficiency to decline, impacting thousands of users, which is why solutions like sharding and Layer-2 blockchains are increasingly leveraged.
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