How Scalable are Blockchain Solutions?

Published by Madhuri Walia on

Blockchain


The cryptocurrency wasn’t made with an idea of widespread use or adaptation. With the daily transactions increasing, plenty of issues are coming up. The blockchain awareness levels also have gone up. The excitement level is quite high and peer pressure is rising. Still, the scalability question does not fail to pop up in the blockchain conversation. For enterprises’ the fear of scalability can be justified. Suppliers of a blockchain technology know the bottleneck. Let us look at its scalability issues and initiatives to unlock this puzzle.

Is Scalability Really Important?

Scalability is the ability of a technology or system to improve and meet the growing requirements. Naturally, enterprises do not want to be caught in the setup that does not deliver. The main fear is introducing the nascent technology, such as blockchain, that can set them backward on their scalability index. Learning from past experiences, enterprises are very careful in disturbing the ecosystem “that really works”.

Challenges Faced

Scalability challenges of a blockchain network originate mainly from a need to balance core tenet of the decentralization versus performance. Bitcoin is horizontally scalable, but not scalable vertically. There are 3 main features that should be considered while developing blockchains;

  1. Decentralization: The open source decentralization enables for the censorship-resistant and inclusive network, which allows anybody to participate without any prejudice.
  2. Security: The distributed network is quite resistant to various hacks and attacks like 51% attacks, Distributed DOS attacks & Sybil attacks. Very importantly, blockchains are the fault-tolerant; it means that this system can continue functioning even if the component of a network fails.
  3. Scalability: It refers to the capacity of the blockchain in processing the transactions in any network. The scalable system can cater to any transaction or activity in a network without even suffering any network stress.

Costs of the Blockchain System

Blockchain is essentially the linked-list of the blocks having ordered-data and constraints around:

  • Blocks cannot be modified when added,
  • It is distributed or decentralized
  • There’re specific rules to put putting data in a blockchain.

All these constraints, if implemented in a protocol form, yield the data-recording system with highly desirable features:

  • Immutability of data
  • No single control point and failure
  • Verifiable audit changes

Because of these benefits, blockchain systems are well suited for scenarios where mistrusting parties need to exchange the value digitally. But, these benefits do not come free. When we look at a different angle, then blockchain is the slow and immutable database with high redundancy that means it’s costly to maintain and tough to scale.

Need for Scaling

Over the past, some years, cryptocurrencies (particularly Bitcoin & Ethereum) have attracted huge interest among the people. For example, the number of transactions at Ethereum increased from 3,000 to one million in 2015 at a certain point.

Are There Are Any Solutions to This Scalability Issue?

As we can see the problem isn’t with the storage and CPU processing, as some claim, but with the network bandwidth and latency. Suppose nodes take very long to communicate the data between themselves, then we risk making any network asynchronous and destroying the value of time-stamped transactions. The educators and developers have tirelessly worked in deploying some new technologies around blockchains that help to reduce the bottlenecks with its network’s latency & bandwidth.

Sidechains

Sidechain is the separate blockchain attached to the parent blockchain by using 2-way peg. This peg allows interchangeability of the assets at a predetermined rate between a parent blockchain and sidechain. The original blockchain is generally referred to as ‘main chain’ and additional blockchains will be referred to as ‘sidechains’. Sidechains might need extra communication between the chains, but, it promotes higher interoperability level between the blockchains, the key dimension of scaling.

Childchains

Sidechains refer to the blockchains that are interoperable as well as connected to the 3rd party blockchain; Childchains refers to the technology that enables certain transactions to get forged in the subset chain, in the parent blockchain.

Payment Channels

Such innovation allows for the off-chain channels to stay open, peer-to-peer, allowing the users to carry out without paying any fees. An idea is you can commit certain bitcoin to open the channel with other nodes that allow you transact with the said node until the channel gets closed, and balance gets distributed between the participants.

Conclusion

While scalability concerns are quite valid, it as a barrier to adoption is crumbling. It is the healthy sign and must boost up the assurance of enterprises to go ahead.


Leave a Reply

Your email address will not be published. Required fields are marked *