How Do We Solve the Blockchain Scalability Problem?

Achal Arya blog February 11, 2020

How Do We Solve the Blockchain Scalability Problem?

The throughput capacity of the blockchain needs to expand. It really is as simple as that. This is a dilemma that has faced blockchain technology for a while now, and it is an issue that is being worked on, as we speak. So, what exactly is the problem with blockchain’s scalability? Well, as with many new technologies, problems can occur once a new idea becomes hugely popular.

In the early days of Ethereum and Bitcoin, the maximum size of the blocks used in the blockchain was limited. The reason for this limit was to make the cryptocurrencies more secure, but unfortunately, it doesn’t lend itself well to future-proofing the networks. As the blockchain increases in size with each transaction, the speed at which these transactions can occur, decreases. With Bitcoin maxing out at around four transactions per second, and Ethereum having a similar problem (around fifteen transactions per second), scaling these cryptocurrencies up to the level of other, more widely used currencies, could conceivably see them crack under the pressure. With the ease at which consumers can already check trading crypto price movements, and the interest growing by the day, this is a problem that needs to be addressed.

Separate transactions, or increase block size?

To combat this issue, various companies are trying their hand at creating solutions that can increase the number of transactions that can be made at one time. One solution that is being touted is to keep small transactions out of the blockchain, until both parties that are trading decide to close the transaction channel. In essence, putting through the total transaction in one go, rather than lots of little ones. This would free up blockchain traffic and allow it to concentrate on the much larger transactions (that are obviously fewer in number). 

There is also the option of moving some of the transaction off-chain. This would rely on certain transactions being completed without miners, and only synchronizing the absolutely essential information. This could mean a move away from blockchain technology within the cryptocurrency world, but it would come at a cost. Compliance issues could plague this way of doing business, while users may also find the idea that the fact these transactions would be harder to verify, questionable. 

Other crypto evangelists are pointing towards DAG-enabled dynamic capacity expansion, to provide a solution to the congestion problem that blockchain is likely to experience in the near future. In the simplest terms, DAG technology will allow for dynamic expansion of the block size, which will increase transaction speed, and allow for increased scalability. If you imagine the blockchain as a highway with only one offramp, a DAG enabled system will essentially open up an unlimited number of parallel highways, thus removing the bottleneck caused when all traffic is trying to use the same, one exit. 

Same old blockchain, just bigger and more capable  

Things do have to change within the crypto world, in regards to blockchain technology, that much is certain. Without a solution, transactions are likely to take longer to finalize, and in a financial world where the average consumer is used to having money moved around instantaneously, crypto will have to keep the pace. The answer could reside in the ‘beefing up’ of the block size within the blockchain. One company has experimented with a block thousands of times bigger than that currently used in Bitcoin, and this looks like it could be the most sensible way forward. The inherent boons of the blockchain will remain, but the limitations of the current solution (with their few megabyte data caps) would be a thing of the past. 

Whichever way ends up being the solution for blockchain-based cryptocurrencies, it is a change that is very much needed, and in turn will be very much welcomed. The blockchain is not the first technology to become a victim of its own success, and it surely will not be the last. As solutions are being prepared, methods tested, and results garnered, the likes of Bitcoin and Ethereum will react and adapt accordingly. There may be bumps along the road, but the destination is still the same, and most definitely reachable. The goal of becoming a long-term, decentralized, viable alternative to the money will all use on a daily basis is still very much within our sights. 

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Author: Achal Arya

I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.

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Achal Arya 274 Articles

I am an entrepreneur and a writer with a bachelors degree in Computer Science. I manage the blockchain technology and crypto coverages at Coingape. follow me on Twitter at @arya_achal or reach out to me at achal[at]coingape.com.

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