The adoption of Blockchain by more users is accompanied by increased scalability problems, which cause transaction latency. There are many blockchain scaling options to deal with these problems. This article will unfold all about blockchain scalability issues and their solutions.
1. What are the issues of blockchain scalability?
The inability of public blockchains to scale limits the availability of optimal solutions to businesses and industries. Many internet transactions between individuals or companies are supported by a centrally controlled system (or controlled by a third-party organization). Executing a digital payment or money transfer transaction between two entities, such as a bank or credit card provider, may act as a third-party company (or individuals). The third-party vendor charges every successful transaction a fee.
In a merged manner, the third-party controls and manages virtually all the stakeholders’ information, taking part in the online transaction. This method causes a third party’s involvement to ensure the transaction’s security. A Blockchain is an immutable distributed ledger of cryptographically signed transactions maintained by a peer-to-peer network in which no third party is required to handle the information, and trust among network users is no longer an issue.
The most significant barrier to establishing public blockchains in many real world commercial situations has been identified as scalability. The scalability problem with Blockchain emerges primarily as the number of nodes and transactions grows. Because each node must store and execute a computational activity to validate each transaction, this problem exists in major public blockchain systems (Bitcoin and Ethereum).
As a result, public blockchains require massive processing power, high-speed internet connectivity, and vast storage space continuously. Transaction throughput and latency are two commonly debated blockchain performance metrics, and both have yet to achieve a satisfactory Quality-of-Service (QoS) level in many recent public blockchains.
2. What are the various blockchain scalability solutions?
Scalability is the most significant barrier to widespread blockchain adoption, so effective Blockchain scaling solutions are required. Many solutions are currently being developed to address blockchain scalability. Unexpectedly, solutions to blockchain scalability issues can be classified into four distinct categories. Each solution offers unique approaches to addressing the Blockchain’s scalability issues.
First layer scalability solutions
The most common response to the question “how do you address a scalability problem in blockchain?” would be layer-1 solutions. The first layer, or layer one solution, cause changes to the software of the core blockchain network. As a result, layer one solutions are frequently called on-chain scaling solutions.
Layer 1 solutions improve the essential characteristics and attributes of the blockchain network, like increasing the block size limit or decreasing the block verification time. Layer 1 blockchain scaling options include sharding, segregated witness (SEGWIT), and hard forking.
Second-layer scalability solutions
First-layer or on-chain scaling methods rely heavily on changes to the leading blockchain network. Off-chain scaling methods have emerged because of research into how to solve a scalability challenge in a blockchain network.
Off-chain scaling solutions are available for the second layer or layer 2. Layer 2 solutions are additional protocols built on top of the primary Blockchain, and secondary protocols are used to ‘offload’ transactions from the primary Blockchain.
As a result, layer two solutions can be essential in addressing space and network congestion issues. Second-layer solutions include state channels and off-side chains.
Scalable consensus mechanisms
In your search for answers to the question “how do you address a scalability problem in the blockchain?” you would come across scalable consensus techniques. There are several consensus techniques available that should speed up agreeing. As a result, scalable consensus algorithms may offer improved scalability and transaction throughout. Some notable examples of scalable consensus processes that serve as effective blockchain scalability methods are Proof-of-Stake Delegation, Proof-of-Authority, and Byzantine Fault Tolerance.
Scalable distributed ledgers
Blockchain technology is just one component of the more extensive distributed ledger technology (DLT) ecosystem. Besides Blockchain, there are other types of distributed ledgers. The intriguing fact is that these distributed ledgers do not use the same data structure as Blockchain to organize information into a chain of blockchains.
While several factors can interfere with blockchain scalability, the wide range of blockchain scalability solutions provides much-needed relief. Blockchain scaling solutions of various types, such as layer one solutions, layer two solutions, scalable consensus methods, and DAGs, offer practical solutions to blockchain scalability issues. Contact SmartOSC if you need help with blockchain development solutions services.
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