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Blockchain Scalability Problem: Explained

With its public ledger system and high-tech data security, the blockchain network has revolutionized our view of decentralized technology. 

However, this futuristic technology is not without drawbacks. The following are problems plaguing the blockchain network that has been a matter of contention for years :

  • block size
  • Scalability
  • Fees
  • Response time

Here we will be diving into the most prevalent concern of the advanced network, the Blockchain scalability problem. This article will answer all the questions revolving around Blockchain’s scalability, its effects, and the solutions. So, let’s jump straight in.

What is Blockchain Scalability?

Scalability refers to a computer system’s capacity to manage an increasing amount of work (e.g., search engine or a database). For example, a blockchain network with a huge volume of data does not scale well or has limited scalability. This is because the Blockchain network does not take substantial steps to adapt the system to meet the rising demand for data, resources, and information (e.g., servers, computing power, or bandwidth).

Scalability has a wide range of implications when it comes to blockchain technology. Increasing the scalability of the cryptocurrency can drastically improve throughput, bootstrap time, lag, and cost per transaction.

Distributed blockchain networks can be described as “scalable” despite their vastly varying throughputs. However, it is critical to recognize that the word “scalable” in Blockchain technology is a misnomer. A scalable blockchain platform can reach a higher TPS than other existing systems by altering or developing its consensus technique and tweaking particular system properties.

Why is Scalability Vital for Blockchain Network?

The growing use cases of blockchain technology adoption cannot degrade the performance of a fully scalable blockchain. Blockchains with lower performance as a result of increased usage may lack scalability.

Furthermore, the blockchain trilemma conundrum argues that increasing scalability at the price of security and decentralization is a losing proposition. But, at the same time, it’s essential to realize that blockchain networks can only compete with older, centralized platforms if they’re scalable.

So, can Blockchain scaling solutions be developed without jeopardizing security or decentralization? And if yes, then what are the most practical ways to solve the blockchain scalability issue?

How to Solve Blockchain’s Scalability Problem?

Without a shadow of a doubt, Blockchain is the future. Therefore companies around the globe have been coming up with innovative solutions to tackle every problem in the way. However, the most popular solutions can be divided into three categories:

Scalable Consensus Mechanisms

Improving consensus methods is one of the most widely advocated solutions for the blockchain scalability problem. Well-known blockchain networks like Bitcoin now use the Proof of Work consensus protocol. Unfortunately, even though the Proof of Work consensus technique is secure, it is incredibly sluggish.

As a result, several blockchain networks consider the Proof-of-Stake consensus method as a viable solution to their scaling problems. The PoS consensus technique does not require miners to use significant computer resources to solve cryptographic algorithms.

On the contrary, it secures network consensus by selecting validators based on network stakes. PoS consensus might significantly increase the bandwidth of Ethereum networks while also boosting security and decentralization.

First-Layer Solution

Decentralized, secure, and scalable first-layer blockchain technologies are the need of the future. To achieve this, networks have turned to various methods to boost overall scalability.

The following techniques are frequently used in foundational Layer 1 solutions:

Sharding

A sharding strategy is an experimental method in the blockchain domain since it involves splitting up a network into one or more distinct database blocks in order to make the Blockchain more manageable.

As all “shards” are processed in parallel, this strategy relieves all nodes of the present burden of processing or handling network maintenance procedures, allowing for more processing capacity to be utilized for other functions.

Hard Fork

A hard fork is a technique for making fundamental or structural changes to the characteristics of a blockchain network. For example, hard forking may mean increasing the block size or reducing the time it takes to construct a block. While first-layer blockchain scalability solutions need hard forking, a disputed hard fork is the most productive alternative.

The problematic hard fork effectively indicates a split on the broader blockchain network, with a section of the community disagreeing with the core community on key matters. A subgroup of a blockchain community may choose to make substantial changes to the underlying source in such cases.

Second Layer Solution

Changes to the primary blockchain network significantly impact the feasibility of first-layer or on-chain scaling techniques. Therefore, off-chain scaling approaches have emerged as a consequence of studying how to handle a scalability difficulty in a blockchain network.

Off-chain scaling alternatives are the second layer scalability solutions. Secondary protocols would be used to ‘offload’ transactions from the original Blockchain. Layer 2 solutions are supplemental protocols built on top of the core Blockchain.

Therefore, second-layer scalability solutions play a vital role in solving network and space congestion problems. Here are some of the popular second-layer solutions:

Lightning Network

The lightning network is a futuristic off-chain solution catering specifically to the Bitcoin blockchain. Operating via the lighting network, the Bitcoin blockchain’s transactions could skyrocket from seven to 1,000,000 transactions per second. Ideal for microtransaction or paying particular service, the process is cheap, secure, fast, and anonymous.

Plasma

Plasma is a well-known second-layer scaling solution in the blockchain scalability space. It uses child chains that start with the parent blockchain and act as distinct blockchains. As a result, Plasma might be developed for use cases requiring processing a certain type of transaction in a similar environment with better security.

Sidechains

Layer 2 solutions such as sidechains are also popular for identifying how to fix a tie-up in the Blockchain. The sidechain acts as a transactional chain alongside the Blockchain in large batch transactions. Sidechains employ different consensus procedures than the core chain.

In Conclusion

With the possibility of its applications in several areas, the future of Blockchain appears to be fairly bright. However, as users grow, more extensive blockchain networks will become necessary. A thorough grasp of the blockchain scaling problem demonstrates how scalability is expressed in terms of cost and capacity, networking, and throughput.

You can also determine the many elements that contribute to blockchain scalability concerns. For example, scalability is hampered by blockchain network and hardware limits, rising transaction fees, block size, and transaction completion times. Furthermore, the scaling trilemma is a challenge for blockchain scalability. The existence of some methods for tackling Blockchain scaling concerns, on the other hand, shows great potential.

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