What is Blockchain Scalability?
Scalability in blockchain, which largely refers to transaction speed, is undoubtedly the crypto industry’s simultaneous holy grail and bottleneck. Cryptocurrency transactions currently take longer than regular payment methods. However, there are a variety of hypotheses being developed in the crypto communities on how to best get past this obstacle and the promise of advancements that could eventually lead to nearly instantaneous transaction speeds.
What is Blockchain Scalability Trilemma?
The scalability of the blockchain is one of the biggest obstacles for cryptocurrencies is the trilemma. It claims that you can only concurrently achieve two of decentralization, scalability, or security—never all three. Trade-offs are therefore unavoidable.
Vitalik Buterin, the creator of Ethereum, originally came up with the term “trilemma,” which he used in reference to this challenge of blockchain technology. Trilemma is not a rigorous mathematical proof, merely an observation. Even though the trilemma is challenging, unless it has been demonstrated that it cannot be solved, an algorithm that can do so may exist.
New Directions for Ramping up Blockchain Scalability
Blockchain scaling is challenging, however several initiatives are being made by the academic community and the cryptocurrency sector to address the scalability trilemma. There are three ways to scale blockchain technology:
Layer 1 (on-chain) Solutions
First-layer solutions necessitate modifying the blockchain’s core programming. A blockchain with on-chain scalability represents structural change.
1. Segregated Witness
The Bitcoin protocol upgrades known as SegWit modifies the structure and method of data storage. Segwit was designed with the goal of resolving the transaction malleability issue. A transaction’s digital signature, which confirms the sender’s ownership and fund availability, takes up a lot of space. Each transaction’s signature data is removed, freeing up additional space and allowing for the storage of more transactions.
Despite the fact that SegWit boosts throughput and makes it possible for Bitcoin to process more transactions, it is not a viable scaling solution for a number of reasons. Segwit is not a universal scaling solution, to start with. Second, it can be used with the sole blockchain built on bitcoin. Third, Segwit increases the number of transactions that Bitcoin can handle but does not shorten the confirmation time.
2. Sharding
Sharding, commonly referred to as horizontal partitioning, is a type of database partitioning. A large database is divided into smaller, more manageable chunks as part of the process, which aims to boost efficiency and speed up query execution. One way to think of blockchain is as a distributed database. The blockchain network will be split into many segments thanks to sharding, and each segment will be controlled by specific nodes that have been assigned to it.
By doing this, the system’s throughput can be significantly increased because arbitrary numbers of node clusters can operate concurrently to process the transactions.