Why scalability is a big problem for cryptocurrency

There are a lot of cryptocurrencies, they are all different. They are united by the fact that they bring something innovative to our world. All cryptocurrencies have one common and, probably, the main problem — scalability.

What is the heart of the scalability problem

Scalability is the ability of a cryptocurrency to cope with the influx of a large number of transactions at a time. For example, Bitcoin operates smoothly at seven transactions per second. If there are more than seven transfers per second, then all transactions are queued for refill. This queue is formed due to the free commission of Bitcoin. That is, a person who paid the largest amount as a commission, takes a higher place in the queue.

Such an unpleasant situation arises because of restrictions in the blockchain. The bottom line is that each block has a strictly prescribed maximum of information, which it can accommodate. Such restrictions help the system to more easily get through DDoS attacks on the network. And transactions are the very information which is written in the blocks confirming translations. It takes time for the creation of each block. Each cryptocurrency has its own creation time, but for Bitcoin this process takes 10 minutes.

A large number of transactions requires a large number of blocks. The miners come to rescue with this. They provide “deciphering” of blocks with subsequent confirmation of transactions. It seems that everyone is happy, but no.

Even with the miners, commissions and small-sized blocks, cryptocurrencies cannot ensure the successful execution of a huge number of transactions simultaneously. That is, in the case of a large influx of operations, the systems may not be able to cope with traffic. In this case, the currency will experience a temporary blackout or simply cancellation of the entire transaction queue. Such an incident will damage the reputation of the cryptocurrency, and, consequently, its rate.

What solutions have been proposed and implemented for the scalability problem

The problem of scalability very much slows down the development of cryptocurrency technology. For example, it is unprofitable for restaurants and stores to accept payments in tokens precisely because of possible delays and other accompanying problems associated with scalability.

In such conditions, all the cryptocurrency developers’ forces are aimed at solving the scalability problem. Nowadays there are discussions about which solution is better for this situation. Here are some of them.

Increase the block size up to eight megabytes

Such a proposal was put forward by a large number of companies and experts in 2015. In general, then there was a whole story related to this solution. The gist of it is that one group of programmers decided to create a new cryptocurrency based on the Bitcoin protocol, but with bigger blocks up to eight megabytes. Another group wanted to create a new currency with its own protocol without expanding the block. At first, the companies agreed on a compromise, but as a result, there was a disagreement between the developers.

Ok, time to reveal: the first group of developers were the guys who later created Bitcoin Cash, and the second group was Blockstream company with its SegWit protocol, which was the goal of a compromise. Disagreement occurred after the creators of Bitcoin Cash made a number of important decisions without the participation of the head of Blockstream Adam Beck.

Now there is a Bitcoin Cash currency with expanded blocks. But this approach is not a solution for the problem, because transactions can overcome the boundary of eight megabytes. In general, the idea of ​​increasing the block can not guarantee a greater carrying capacity of the system during the flood of operations.

Transfer of a transaction signature from a block to another structure

This solution comes from the previous point. The SegWit (Segregated Witness) protocol of Blockstream company is a Bitcoin’s softfork. This means that the update in the code will not affect the “skeleton” of the cryptocurrency itself, but will only correct the shortcomings in the blockchain system.

The block with a separate signature takes up 4 megabytes, and transactions take up only 2 megabytes.

This is a very good solution, because the signature takes up about half the weight of the whole block. The heart of the solution lies in the fact that the protocol transfers the signature of the transaction from the block to another structure. The enlarged block with a separate signature takes up 4 megabytes, and the transactions occupy only 2 megabytes of the block itself.

Lightning Network

The Lightning Network protocol uses channels and nodes in the cryptocurrency network. Its main advantage lies in the fact that it can actually conduct operations in real time mode.

The bottom line is that you need two nodes and a channel between them to carry out the transaction. Then both nodes set a certain amount to maintain the channel, the carrying capacity of which is formed from the funds deposited.

The Lightning Network is at the alpha-version stage, but is already considered to be the best scalability solution to the problem.

Conclusion

Scalability is a big problem for all cryptocurrencies. Now it is very popular to search for ways to eliminate this shortcoming. Therefore, we have a lot of proposals for scalability. In this article, only the brightest and most known of all were reviewed.

In fact, these days new cryptocurrencies with a revolutionary solution to this problem appear. In general, the scalability problem will be solved very soon. Just one more year of waiting time left maximum two. But it is unlikely that this will take more time, because the cryptocurrencies are developing at a frantic pace.

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