Blockchain’s Scaling Problem

Cryptocurrencies and blockchain increasing in popularity and gain public awareness, but there is a risk the technology will not be able to meet the demand.

The biggest names in the business, Bitcoin and Ethereum, use blocks to process the transaction. However, in the early days of their development , the maximum block size is limited – in the case of Bitcoin, only 1MB.

Although this mechanism is designed to make Bitcoin is more secure, it does not help the network become a future-proof. With each transaction comes the data, and with a maximum size of 1MB per block, there are only so many payments that can be processed at once.

At maximum, Bitcoin can handle about three to four transactions per second. But if crypto is to go mainstream, it would need to process hundreds of thousands of transactions per second to ensure the economy can keep moving without major delays for consumers and businesses.

Unfortunately, Ethereum have the same problem – as a co-founder Vitalik Buterin himself admitted. the network has a maximum capacity of 15 transactions per second, and he warned that if the status quo remains of the infrastructure industry will be able to cope.

So … why not simply increase capacity?

Unfortunately, this is not as simple as releasing an update overnight.

Although most people in the world of crypto agree that the framework and the scalability needed to be addressed if the industry has the opportunity to overtake the fiat financial institutions, came up with the solution takes time and effort.

In part, this is because each proposal must have the support of the miners, developers, businesses and other stakeholders before it can be enforced – a process that can take months and, even then, ended in disagreement.

A good example comes with Bitcoin, where there is an active discussion to change the size of the block for years. Here’s the problem: While some are satisfied with a double to 2MB, others want to be more adventurous and go to 8MB or even 32MB, no proposal getting enough traction to be adopted.

In May of 2018, Bitcoin Cash (BCH) is successfully activated upgrades that quadrupled the size of the block to 32MB. It is expected that the increase will allow cryptocurrency to cater the demand of the future and pave the way for new features to be introduced. However, critics argue that the changes made full gland surgery is more expensive, and this in turn can lead to less decentralized network. Supporters BCH, which is the result of hard fork in August 2017, said improved block size is one of the reasons why it is far superior to Bitcoin.

What other solutions are there?

Several ideas have been proposed to help people like Bitcoin and Ethereum increase.

For example, the Lightning Network is a secondary layer that operates on top of blockchain a. In theory, it can process an unlimited number of transactions – payments that are not commonly recorded in the blockchain. final balance is only added to the ledger when each transaction has been completed. Although there has been no expectation that this will solve the problem of scale Bitcoin, there is a drawback – especially with regard to security. This could be the case that a protocol like the end to become the standard for smaller, everyday payments – freeing blockchain for larger transactions and allows costs to fall.

Pak Buterin, mentioned earlier, also has come up with a solution blockchain scale. The idea, known as the Plasma Cash, will allow each user to only focus on the block that contains the coins that they care about – helping to optimize data. According Buterin, this solution can also prevent fraudulent transactions and stop the crypto investors from losing money if the exchange hacked.

Is there an argument to scale off-chains?

decentralized application does not need to fully run on blockchain a – which means a lot of processes they can be processed “off-chain.”

On the one hand, this is comparable to the application that you might use on a PC.

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