Blockchain scalability mainly refers to transaction speed, which is clearly an objective and restriction of the crypto industry at the same time. In the current scenario, crypto transactions take longer time than normal transactions. For this, there are a lot of things being developed in the crypto industry on how to best cross this hurdle and the guarantee of developments that could finally result in quick transaction speeds.
The capacity of any network is also determined by scalability, which affects certain things such as the number of network nodes, the number of transactions handled by a network, the speed of handling transactions by a network, and so on.
The blockchain of Bitcoin is scalable as other users join the network, the term scalability is enigmatic. The PoW algorithm will change the level of difficulty and the network may back any quantity of nodes on its own.
Problems associated with Blockchain Scalability
The problems associated with scalability in blockchain technology are mainly the challenges faced in handling the growth of the number of transactions. As any blockchain network such as Bitcoin or Ethereum grows in popularity, they face challenges in initiating transactions swiftly and effectively because of the restrictions in transaction output, resulting to higher fees and more confirmation times.
Revolutions like Layer 2 solutions, sharding, and consensus mechanism developments are being made to address these problems, targeting to improve the capability of the blockchain to back a wider scale of use without compromising security or decentralization.
Blockchain Scalability solutions
To make transactions more swifter, second-layer scalability solutions integrate a second layer to the main blockchain network. The primary blockchain is associated with a smaller blockchain referred to as a sidechain.
Utilizing a two-way peg, mainchain, as well as sidechain assets, can be traded at a defined price. By transferring some programs on sidechains, sidechains can be used to empty out the mainchain.
An off-chain network that resides beside the main blockchain is referred to as a payment channel. The main target is to make a communication path between the parties participating in the transaction.
As every transaction in the channel takes place off-chain, the need for universal consensus takes a back seat. Some of the blockchain scalability solutions are mentioned below and we’ll discuss them one by one.
- Off-chain solutions
The off-chain solutions, mainly known as second-layer blockchain scalability solutions are methods that have been made to address the problem of scalability in the blockchain. When the number of transactions on the blockchain network grows, the network becomes overloaded and slows down, which results in delaying the confirmation of transactions.
The solutions target to reduce this challenge by making a secondary layer on top of the primary blockchain network, which is mainly created to handle a high volume of transactions. At the same time, the secondary protocols are made on top of the primary blockchain, where transactions are emptied out from the primary blockchain to save space and cut down network congestion.
- Sidechains
A sidechain is another blockchain that is associated with the primary blockchain, also known as the mainchain. The assets on the mainchain as well as the sidechain can be traded off at a defined price by utilizing the two-way peg.
Sidechains can be utilized to slump down the load on the mainchain by transferring some applications to the sidechain. If inter-blockchain communication is more effective, sidechains can be proved as a promising solution to blockchain scalability problems.
- Payment Channels
A payment channel is a method for initiating transactions off the main blockchain, functioning parallel to it. This amalgamates making a channel between two parties who wish to make a transaction. Transactions that happen within the channel are off-chain, it means that they do not need network consensus and can be performed swiftly by the use of smart contracts, having lower fees and at a swifter pace.
Importance of Blockchain Scalability
Scalability in the blockchain is very important as it refers to the capability of a blockchain network to handle bigger transactions and users without facing delays or network jams. When the number of transactions on a blockchain network grows, blockchain scalability becomes critical for a fast and efficient network. Without good blockchain scalability, the network can be tangled and slowed down, resulting in delays in transaction confirmations and a less effective overall network.
This can influence the user experience negatively and obstruct the adoption as well as growth of the blockchain.
