Why is blockchain scalability a significant challenge to overcome?
Scalability is a significant issue in every database, and in blockchain, this issue is limiting its adoption across the globe. Websites like Blockchain Provides a trading platform that permits you to begin digital currency trading in three steps. Without blockchain technology, the modern world would not exist. But the issue is the need for more scalability and capabilities in blockchains to navigate the types of transactions that are happening almost daily.
It has been an issue since day one, but there is no getting around it now — if you want to be part of this coming revolution, you’ll need to learn how blockchains and smart contracts work. When we say “blockchain scalability,” we mean the capability and speed with which blockchains can process information or carry out transactions on different scales. In terms of scalability, blockchain is not as proficient as other databases that people use in their businesses to record transactions and contracts.
One of the enormous bottlenecks in the cryptocurrency industry is the scalability of blockchain, which usually means the speed of completing transactions. If you are unfamiliar with the term scalability, it is a ubiquitous word in the tech world, but many people still need to understand what it means. For years, entrepreneurs worldwide have been trying to find a suitable solution for blockchain scalability issues. They all approached it from different angles, from creating new blockchains from scratch to experimenting with different consensus algorithms.
In the cryptocurrency industry, scalability can be defined as the ability of an application or network to handle growing amounts of work (i.e., transactions) while maintaining fast performance (i.e., short processing times). Cryptocurrency developers and experts are working on a different solution that can solve every issue related to scalability. One of these solutions is using a consensus mechanism that requires less energy to verify the transaction.
The bottlenecks: Throughput, finality, and confirmation time:
As discussed above, one of the biggest bottlenecks in the cryptocurrency industry is the scalability of blockchain. It further arises from issues like slow confirmation time, finality and a few others. The issues related to throughput, finality and confirmation time have a common origin. They have to do with the limited capacity of a blockchain. In other words, they are caused by the size of the blocks produced. The more transactions carried out within a given time frame, the bigger the number of blocks needed to record them. These bottlenecks have been limiting the use of blockchain in different industries for a very long time, which is one of the main reasons blockchain has yet to mainstream adoption.
The blockchain scalability trilemma:
When it comes to the issue that cannot be resolved quickly in the cryptocurrency industry is the scalability Trilemma. There are three challenges that blockchain presents when trying to scale. The first trilemma is privacy versus scalability, which relates to how transparent a ledger can be to be adequate for such an important application as a financial ledger.
The second trilemma is cost versus scalability, which relates to how much energy a blockchain uses. The third one is the requirement of trust versus security, and this trilemma refers to how much decentralization it requires. According to experts, there is a defined solution to scalability trilemma as it merely falls under the observation category, and there is no dedicated mathematical proof.
Security is one of the significant aspects that correspondingly contributes to the scalability of the blockchain. Double spending and 51% attack are significant threats to blockchain security, which further impacts its scalability. These are some of the potential challenges that hinder blockchain adoption, but new solutions are being tried daily. The potential solution to blockchain scalability issues includes layer two solutions, sharding and rigid fork. One of the ways blockchain scalability is solved is by using the so-called hard fork.
The Bitcoin community have come across a bitcoin hard fork numerous times, and some of the famous ones are bitcoin cash, bitcoin gold and bitcoin classic. Hard forks allow for faster blocks and higher transaction throughputs which means better processing times. These solutions can double up with the help of another application that further improves scalability called sharding. Sharding will allow blockchains to process transactions in parallel, thereby increasing throughput and scalability, especially in situations where high volume is required (e.g., in payment or asset exchange). To improve the scalability of the ethereum network, the developers will introduce the concept of sharding in its blockchain platform and correspondingly implicate a new consensus mechanism named proof of stakes.
