What are The Various Blockchain Scalability Solutions
Blockchain is a decentralized technology that works as a distributed ledger to power transactions. With decentralized transaction management, every node can autonomously initiate a transaction according to the agreement specified by a smart contract, with no third-party intervention. As the number of people using blockchain expands, the number of scalability concerns, causing transaction latency.
There are several Blockchain scaling solutions available to overcome these concerns. This post will discuss blockchain scalability and the key solutions to remove latency in the blockchain.
What is blockchain Scalability?
The ability of a computer system to handle an increasing volume of work is referred to as scalability (e.g., a database or search engine). With a large amount of data, a blockchain network does not scale properly or has low scalability. Blockchain does not make significant measures to modify the system to deal with expanding demand, data, and resources (e.g., computing power, servers, or bandwidth).
Talking about scalability, it has a variety of significance in case of the blockchain technology. For instance, to upgrade Bitcoin with reference to the features of throughput, bootstrap time, latency, cost per transaction; is referred to as increasing the scalability of the Bitcoin network.
Although their throughputs are substantially different, multiple blockchain networks can be called “scalable.” It is crucial to understand that the term “scalable” is a contrasting term in Blockchain technology. When a blockchain platform is said to be scalable, it achieves a greater TPS than other current systems by changing or evolving its consensus method and adjusting specific system characteristics.
What is the problem of scalability in blockchain?
The inefficiency of the public blockchains to scale loads of data is impeding the need for optimal scalability solutions to the various industries using blockchain. In the case of a centralized system, there is a third-party intervention that charges huge transaction fees to execute a transaction. This third-party monitors and controls all of the stakeholders’ data, who are participating in the online transaction in a consolidated manner.
In contrast to centralized systems, blockchain is an immutable ledger that manages the cryptographically signed transactions on the P2P networks. blockchain does not allow any third party to intervene, therefore taking care of the security of the transactions and eliminating the third-party cost. Blockchain, a distributed technology with an immutable ledger, stores and processes loads of transactions. Because of this, blockchain faces scalability issues, with an increased number of nodes and transactions. Blockchain networks like Bitcoin and Ethereum face major scalability issues in context to the data computation.
Therefore, to address the problem of low scalability, public blockchain platforms need processing power, speedy internet connectivity and good storage on-chain. Latency and transaction throughput are the two fundamentals that affect blockchain. Let us now learn about the importance of scalability in blockchain in the next section.
Why is blockchain scalability important?
Scalability in the blockchain is about the network’s capacity to process a large amount of transaction throughput, and it is the fundamental criterion in minimizing network downtime. The increased use cases and adoption of blockchain technology cannot affect the performance of a highly scalable blockchain platform. Blockchain platforms with lower performance and clogged networks have low scalability due to high data being processed on them.
Talking about the blockchain trilemma with reference to the scalability factor suggests that we will have to compromise on security and level of decentralization to achieve higher scalability. On the same note, it is important for us to remember we need to remember platforms compete with traditional centralized platforms.
What are various blockchain scalability solutions?
First layer scalability solutions
Layer 1 solutions improve the key properties and attributes of the blockchain network, such as increasing the block size limit or cutting the block verification time. Layer 1 blockchain scalability options include sharding, segregated witness (SEGWIT), and hard forking.
Second layer scalability solutions
Changes to the primary blockchain network have a significant impact on the viability of first-layer or on-chain scaling techniques. Off-chain scaling methods have emerged as a result of a study into how to handle a scalability difficulty in a blockchain network.
Off-chain scaling is provided by the second layer or layer 2 scalability solutions. Layer 2 solutions are additional protocols that are installed on top of the main blockchain, and secondary protocols are used to ‘offload’ transactions off the main blockchain.
As a reason, layer 2 solutions play an important role in addressing storage and network congestion issues. Second-layer options include state channels and off-side chains.
Scalable distributed ledgers
Blockchains are just one component of the larger distributed ledger technology (DLT) ecosystem. In addition to blockchain, there are other types of distributed ledgers. The interesting fact is that such distributed ledgers do not employ the same data structure as blockchain to manage information into a network of blockchains.
Wrapping Up
A blockchain network may become clogged as more participants and transactions occur, restricting its ability to complete transactions. While various factors can obstruct blockchain scalability, the wide spectrum of blockchain scalability solutions gives much-needed relief. Blockchain scaling solutions of many types, such as layer 1 solutions, layer 2 solutions, scalable consensus methods, and DAGs, offer viable methods to blockchain scalability problems.
