Blocks on a BTC blockchain have a maximum size limit. The current one-block size limit is 1,000,000 bytes (1 megabyte), although with the introduction of SegWit, some of the data that makes up transactions may not fall within this limit.
Virtually unlimited number of BTC transactions
While the original transaction and transaction ID consist of a private key, a public key, and the rest of the data, SegWit moves sensitive data to the sidechain. The transaction ID thus consists only of immutable data. and these are included in the total block volume in bytes.
This means that it is not really possible to include in a block a transaction whose inputs are larger than 1 MB, but it is possible to include in a block a transaction whose total size, including “whitness data”, is larger if the inputs weigh less than 1 MB .
If we look at the picture, it will be clear to us immediately. Witness data took up up to 60% of the space in each transaction. By separating into a sidechain, the room for transactions has basically doubled.
It is worth noting that nowadays BTC transactions do not even have to be recorded on a blockchain.
Thanks to the solution of the second layer “Lightning Network”, it is possible to register only the creation and closing of a channel on the blockchain and then perform a practically unlimited number of transactions with this channel, which do not have to be registered on the blockchain.
Because these off-chain transactions may not be included in any blockchain, they could even be larger than 1 MB if sent by the sender and recipient. In this case, the software used by both parties involved in the transaction decides the maximum byte limits of the transaction.
LN is mainly used for small payments, so the question of the size of the transaction does not arise.
When the BTC transaction exceeds 1 MB
The size of one transaction in bytes is very small, so there can be more than 3,000 per 1 MB, with only input counted. It is not easy to imagine the need to create a transaction that is 3,000 times larger than the norm, but in theory it would be possible.
In addition, there is another huge problem. The transactions actually compete with each other for inclusion in the block and subsequent confirmation. Their shippers increase the fees to try to persuade the miners to include them in the block.
A transaction with an input volume of 1 MB would have to persuade the miner not to include any further transactions in the block, so the fees would have to be higher than what the miner could choose by choosing to include other pending transactions.
With a reward of 6.25 BTC for the extracted block, the miner rarely collects more than 0.5 BTC fee. An entry transaction of 1 MB would therefore have to offer a fee of around $ 23,000, which is very significant for one transaction.
In the future, the 1 MB limit may be increased, but for now, this option seems far-fetched.