It has been a decade since the first blockchain system, Bitcoin, surfaced. Unfortunately, it is yet to make a breakthrough past the finance sector. Investors and experts believe that blockchain technology has the potential to venture into other industries such as music, manufacturing, and real estate. However, to date, this remains a dream to many.
Blockchain mass adoption has been hindered continuously by one challenge, scalability. Scalability is the ability of a feature to be applied in a wide range of capacities. It also refers to the ability to change the size depending on the system’s traffic. Blockchain is very scalable in terms of size but lacks a wide range of capacity scalability.
Here is a quick comparison between Bitcoin, the most successful cryptocurrency, and VISA. Bitcoin has a theoretical capacity of around 27 transactions per second. This is the number of transactions that are capable of fitting into bitcoins’ limited size blocks. On the other hand, VISA has a capacity of 65,000 transactions per second powered only by 119 data centers. Bitcoin’s actual 3-7 transactions per second capabilities cannot be compared to Visa’s.
The solution to this discrepancy lies in Blockchain’s scalability. How can it be addressed?
Solving Scalability problem
Bitcoins’ limited block size of 1 Megabyte and a long block time of 10 minutes significantly reduces scalability. To solve this, developers decided to settle for the block’s size increase and 2-layer protocols introduction.
Segwit2x was quickly developed to introduce 2-layer protocols which will use witness nodes as well as a hard fork of the blockchain. Unfortunately, the solution was dropped before implementation due to consensual issues.
Another solution was developed and branded Lightning Network. The lightning network is a highly scalable 2-layer network that permits instant and affordable transfers. The solution is still in its testing process, with little progress seen.
The Lightning Network is simply a channel built on top of the Bitcoin network. It allows users to carry out bitcoin transactions without having to follow the sluggish bitcoin network protocols. It is fast, hence the name Lightning. Furthermore, it can support speeds of 50,000 transactions per second close to Visa’s record.
Bitcoin is a very congested system, and a successful introduction of Lightning Network will significantly reduce the traffic.
To improve on the low throughput, crypto developers introduced Sharding. A shard is a slice or part of the database which is stored on a different server. This, in turn, spreads the workload. The same principle is applied in blockchain systems. In sharding, not all information is stored in each node but portions of information. This spreads the workload of the blockchain rather than having it concentrated on one node.
Sharding has however raised a few security concerns. Some in the space believe that sharding increases the security threat on a network. But let’s face it. To hack the Bitcoin network today, you will have to take control of over 51% of all the validators. So assuming we have 10 shards, it will mean you need to control 5.1% of the validators, all from the same shard. And that is obviously tough to do.
The partitioning of shards is the fundamental process of the chain’s security, with the validator nodes being selected randomly. The method of choosing validator shards is random and done through an entirely different blockchain network, commonly referred to as Beacon Chain, further minimizing the attacks.
Both sharding and lightning Networks are suitable solutions to the crowded bitcoin industry. Lightning Network provides an efficient off-chain solution while sharding offers a new on-chain solution. Both will also increase the transaction throughput of their systems.
The only challenge is that both solutions deviate from the set cryptocurrency nature, which is the essential beauty of blockchain technology. Other blockchains such as Stakenet are already embracing these solutions in an attempt to thrive in the competitive crypto sphere.
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