Blockchain Scalability Hindrance & How to Overcome It

Blockchain scalability concerns refers to the amount of transactions, the blockchain network can process, in a given time.

In Bitcoin, the on chain transaction processing capacity is limited by the average block creation time of 10 minutes (Every recordable transaction requires peer-to-peer consensus verification) and the block size limit. These jointly constrain the network’s throughput.

The block size limit has created a bottleneck in bitcoin, resulting in increasing transaction fees and delayed processing of transactions that cannot be fit into a block.

Bitcoin currently, can process upto 60 transactions per second, which is nowhere close to in comparison to Visa’s peak rate of 47,000 per second. For it to act similar to any Fiat currency, cryptocurrency must be able to process much higher numbers of transactions.

For Bitcoin to reach Visa’s numbers, it would be equivalent to trading four terabytes of data per year.

Ether, however, despite its lack of block limit, takes approximately 14 seconds to generate a block.

As more and more nodes are added to the blockchain network, the transaction mechanism takes hit as in the consensus mechanism, the number of transactions a blockchain can process cannot exceed that of a single node participating in that network.

In conclusion, the main scalability problems in the cryptocurrencies are caused due to:

* The time is taken to put a transaction in the block.

* The time is taken to reach a consensus.

* Inter-node latency that logarithmically increases with every additional node

To reach to a solution of increasing the network’s transaction processing limit requires making changes to the technical workings by a process known as a fork.

Hard Fork — When a platform drastically branches away from its initial ideals, such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid. Ethereum hard fork resulted in a split creating Ethereum and Ethereum Classic chains. Bitcoin Cash is a hard fork of bitcoin increasing the maximum block size. Bitcoin XT, Bitcoin Classic and Bitcoin Unlimited all supported an increase to the maximum block size through a hard fork.

Soft Fork — In contrast to a hard fork, a soft fork is a change of rules that creates blocks recognized as valid by the old software, i.e. it is backwards-compatible. As for a hard fork, a soft fork can also split the blockchain when non-upgraded software creates blocks not considered valid by the new rules.

Segregated Witness, or SegWit, is the name used for an implemented soft fork change in the transaction format of the cryptocurrency bitcoin.

Second Layer Protocol Systems — Protocols such as the Lightning Network and Tumblebit have been proposed which operate on top of the bitcoin network as a cache to allow payments to be effected that are not immediately put on the blockchain.

The Lightning Network is a payment protocol that relies on the SegWit platform and which introduces instantaneous transactions. In the lightning network, the transactions occur on a seperate channel and are later added to in the blockchain network.

Sharding Zilliqa, a Blockchain platform developed by National University of Singapore researchers, recently reached a breakthrough for scalability on its platform by increasing the throughput threshold to 2,488 transactions per second on an internal testnet by implementing “sharding” technology.

Sharding involves splitting the blockchain verification process and running parallel subcommittees to combine the completed data.

Plasma Plasma was very recently introduced and is among the more promising proposed solutions to scalable computation on the blockchain. Ethereum’s Plasma focuses on the verification of the blockchain, a two-fold process could be employed whereby the Lightning Network processes the transaction and Plasma updates the blockchain.

Though a permanent effective solution to address the scalability of Blockchain network is yet to be achieved, significant noteworthy measures have been taken. These measures promises dedication towards taking Blockchain Technology in Mainstream Adoption.