• The Bitcoin trilemma helps explain why the blockchain has very low transaction speeds
• Improvements in scalability can boost functionality and promote BTC adoption

The most recent Bitcoin [BTC] halving occurred on 19 April 2024. The blockchain’s mining reward was slashed to 3.125 BTC, reducing supply and forcing miners to optimize their hardware. It also reinforced the scarcity of Bitcoin, making it a viable alternative as a store of value.

Michael Saylor, co-founder and former CEO of MicroStrategy [MSTR], realized how he could use this mechanism to his company’s advantage during the previous cycle. In fact, he sees it as a hedge against inflation.

To secure his treasury against inflation, he is not afraid to use leverage to buy more Bitcoin. “The only use of time is to buy more Bitcoin. Take all the money and buy more Bitcoin. Then take all your time to figure out what you can sell to buy more Bitcoin,” he said in January 2024. The king of cryptos is up by nearly 115% since then.

His legendary conviction supports the idea that more and more institutions would add BTC to their treasuries.

Beyond being an investment and inflation hedge, what do users expect from the blockchain? What developments progressed in 2024, and what does 2025 likely have in store for BTC’s on-chain users?

Bitcoin trilemma

The three key aspects of a blockchain are scalability, decentralization, and security. Scalability refers to the ability to process transactions, decentralization is the distribution of decision-making and control across the blockchain, and security is the network’s ability to defend against fraud and attacks.

One of Bitcoin’s major challenges is scalability. Its Proof of Work mechanism and the ever-growing hash rate mean that Bitcoin is highly secure as a network. Decentralization is also not one of the major drawbacks, although, over the years, Bitcoin mining has become more centralized due to the emergence and growth of mining pools.