The size of individual blocks on a blockchain can significantly impact the network’s speed and capacity, but there are always trade-offs. For years, block size has been a source of debate in the blockchain community because it affects both the network’s speed and scalability. Let’s try to figure out why data block size matters.
Blockchains, as you are probably aware, get their name from the fact that they are literally made up of an ever-changing history of blocks. Blocks are batches of transaction data, and the amount of data contained in each block, combined with the chain’s block generation speed, determines the network’s transaction per second, or TPS. A high TPS rate is more appealing, so developers constantly look for ways to improve this metric.
Actual rates vary depending on network conditions, but Bitcoin tops out at around seven TPS and Ethereum at 15 TPS. In comparison, Visa can process approximately 1,700 TPS, so improvements are required if these networks compete as global payment solutions. Because a blockchain’s TPS rate is inextricably linked to the size of each block, this becomes a critical factor in determining a path to mainstream adoption. However, as we will see, simply increasing the size indefinitely is only one approach to the problem, and there are numerous philosophies on how to proceed.
Scaling solutions are classified into two types: on-chain and off-chain. Both have advantages and disadvantages, but no one can agree on which is more promising for future growth.
On-chain scaling refers to the philosophy of altering the blockchain itself to make it faster. One approach to scaling, for example, is to reduce the amount of data used in each transaction so that more transactions can fit into a block. This is similar to what Bitcoin accomplished with its Segregated Witness update, also known as SegWit. This Bitcoin patch significantly improved overall network capacity by changing how transaction data is handled.
Another way to potentially increase a network’s TPS is to increase the rate of block generation. While this can be useful to some extent, it has limitations due to the time it takes to propagate a new block through the network. Essentially, you don’t want new blocks to be created before the previous block has been communicated to all (or nearly all) of the network’s nodes, as this can cause problems with consensus.
Another potential way for these systems to scale is to enable seamless communication between discrete blockchains. If different chains can transact with one another, each network does not have to handle as much data, and throughput should improve.
Off-chain solutions use methods to increase network throughput without altering the blockchain. They are frequently referred to as ‘second-layer’ solutions. The lightning network project for bitcoin is one of the most well-known second-layer solutions. Nodes in the lightning network open channels and transactions occur directly between them. The lightning network only transmits the final transaction tally to be recorded on-chain when the channel is closed.
Another second-layer solution gaining traction is the concept of ‘side chains.’ They are blockchains separate from the main chain and can exchange native assets.
Over the last few years, blockchain transactions have become extremely popular. This has resulted in large numbers of users flocking to blockchains that may not be prepared to handle the throughput. To remain relevant in an environment where blockchains and blockchain technologies are popping up everywhere, these blockchains must develop intelligent scaling issues. SmartOSC offers top-tier blockchain development services, so let’s contact us if you need help.
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