Learning what blockchain scalability is in this deep dive guide
The crypto industry’s holy grail and bottleneck is scalability in blockchain, which mostly pertains to transaction speed. Currently, cryptocurrency transfers take longer than traditional payment methods. The crypto communities are, however, developing several theories on how to best overcome this barrier and the promise of developments that might someday result in practically instantaneous transaction rates.
Without mentioning the Blockchain Scalability Trilemma, one cannot adequately respond to the question, “What is blockchain scalability?” One of the main barriers to cryptocurrencies is the trilemma, which is related to the scalability of the blockchain. It asserts that you can never simultaneously fulfill all three goals—only two of decentralization, scalability, or security. Therefore, trade-offs are inevitable.
Blockchain Scalability Directions Trilemma
- Decentralization refers to a blockchain’s degree of ownership, authority, and value variety. Since no single body has authority over the whole network, cryptocurrencies are sometimes called “decentralized.” Nevertheless, decentralization is a continuum rather than a binary “yes” or “no,” and many projects, like Bitcoin, Ethereum, Ripple, EOS, etc., demonstrate differing levels of decentralization.
- Security is the blockchain’s ability to withstand outside incursions and the system’s resistance to manipulation. Double-spending, Sybil, DDoS, and 51% attacks are just a few of the myriad threats that a blockchain system is susceptible to. Greater freedom, i.e., free admission and departure from the network, results in greater decentralization. Still, security is weakened since verifying the identity of new participants, who may be under the influence of one bad organization or join together to disrupt the network is challenging.
- Scalability, which also influences the number of network nodes, the number of transactions the network can manage, the speed at which it can perform transactions, and other parameters, determines its capacity. The term “scalability” is vague because Bitcoin’s blockchain scales as more users join the network. The PoW algorithm will automatically change the difficulty level, and the network may support any number of nodes.
Second-layer scalability solutions add a second layer to the core blockchain network to enable faster transactions. A sidechain is a minor blockchain that is connected to the main blockchain. The mainchain and sidechain assets can be exchanged at defined prices using a two-way peg.
Sidechains can be used to unload off the mainchain by moving specific applications there. A payment channel is an additional network to the main blockchain that resides off-chain. The objective is to establish a line of communication between the parties to a transaction. There is no requirement for global consensus because every transaction in the channel takes place off-chain.
The scalability problem in the blockchain has been addressed using techniques known as second-layer blockchain scalability solutions or off-chain solutions. A blockchain network may slow down and get crowded as the volume of transactions rises, delaying the confirmation of transactions. By building a supplementary layer on top of the primary blockchain network that is specially made to manage a huge volume of transactions, these solutions seek to solve this issue. Off-chain solutions can offer additional security since the secondary layer may handle the bulk of transactions, freeing up the primary blockchain for more significant or sophisticated ones. Additionally, as transactions on the secondary layer might not be accessible to the whole network, off-chain blockchain scaling solutions can offer greater anonymity.
A sidechain, often called the mainchain, is a different blockchain connected to the mainchain. A two-way peg allows for the exchange of assets between the mainchain and sidechain at a defined price. By transferring some applications to the sidechain, sidechains may be utilized to lessen the burden on the main chain. Sidechains may offer a possible answer to the scalability problems with blockchains if inter-blockchain communication becomes more effective. Connecting several sidechains with a unique architecture to the main chain is possible. It is possible to build a network of sidechains and a mainchain, with the mainchain as a relay network and the sidechains as a blockchain network. Popular scaling techniques using sidechains and relays include Plasma (Ethereum) and Parachain (Polkadot).
A payment channel is a technique for carrying out transactions outside the primary blockchain while still active. This entails opening a route for communication between the two parties involved in the transaction. Off-chain transactions that take place through this channel may be carried out swiftly through smart contracts, with cheaper costs and a faster rate of execution.
Many other issues arise when trying to find a solution to the blockchain scalability issues. For example, suppose the solution only applies to one particular blockchain. In that case, the work is unnecessary or misdirected unless it is assumed that this specific blockchain would eventually need blockchain scalability. Knowing the potential trade-offs is another factor to take into consideration. All currently offered options have their limitations.
A blockchain system called Shardeum attempts to maximize the efficiency and usefulness of smart contracts. This is accomplished by giving users safe and dependable access to the data feeds, APIs, payments, and other resources necessary for smart contracts to work properly. Due to its unique strategy, Shardeum stands out from other blockchain products and is now the industry leader in smart contract interoperability and scalability.
