The Scalability Issue with Blockchain and Some Promising Solutions

The Scalability Issue with Blockchain and Some Promising Solutions

September 21, 2022 by Diana Ambolis
The blockchain is innovative. But one major issue we currently have is blockchain technology’s scalability. It is intimidating that it can’t adjust itself to the enormous workloads. And it moves slowly by nature. In any case, it can improve data security and privacy when used correctly. Additionally, it can aid in preventing identity theft, a
The Scalability Issue with Blockchain and Some Promising Solutions

The blockchain is innovative. But one major issue we currently have is blockchain technology’s scalability. It is intimidating that it can’t adjust itself to the enormous workloads. And it moves slowly by nature. In any case, it can improve data security and privacy when used correctly. Additionally, it can aid in preventing identity theft, a problem that plagues the world. Additionally, blockchain enables quicker cross-border payments and significantly lowers transaction costs.

And we’ve heard that blockchain technology is here to stay. Blockchain should make transaction processing faster if it must, at least to the visa payment processing network level. Here, we explore the issue of blockchain scalability while concentrating on, The first ever widely used cryptocurrency called Bitcoin.

A blockchain technology called Ethereum makes distributed apps and smart contracts possible. On top of Ethereum, you can even develop your cryptocurrency. For the same reason, many initial coin offerings (ICOs), the cryptocurrency equivalent of stock IPOs, are also held on Ethereum.

The blockchain is slow; why?

Anyone can engage in mining. Additionally, each block can only be published once. Other miners will check the block once it has been published, which takes time.

Each block’s maximum size is also restricted. The scalability of the blockchain is a concern.

One block is intended to be published every ten minutes by Bitcoin. Therefore, if there are more transactions, they will have to wait an additional 10 minutes. Thus, the time required to confirm transactions increases as their volume does. The block size is also restricted to 1 MB.

Delaying the low-fee transactions makes sense because miners are the ones who receive the transition fees. As a result, higher prices are required for quicker confirmation when there are many transactions. Furthermore, it makes no sense for a cryptocurrency to levy high fees. Since there is no cap on the number of payments that can be paid, miners will still attempt to add transactions with more considerable costs despite this issue.

However, Ethereum has a quicker block time. Every 15 seconds, one block is typically published. Furthermore, there is no block size restriction. In any case, each block’s total amount of transaction fees has a cap. If the total costs collected by all of the transactions in a block don’t exceed a predetermined threshold, the miner may include as many transactions as he likes.

Remember that Ethereum is a blockchain platform that supports distributed applications and other cryptocurrencies, including its Ether (ETH). Additionally, since miners supply the computing power for these applications, each operation they perform costs money. These payments are then made through transactions, adding to the volume of Bitcoin beyond what is visible. One could say that the problem with proof of work prevents blockchains from scaling.

What exactly is PoW (Proof of work)?

When transactions are used to build a block, the miner must use a particular amount of processing power to publish the block. Additionally, it frequently entails solving a challenging mathematical issue.

Others might verify a block after the miner published it along with the solution. However, it’s quick and straightforward to confirm the answer. The only thing that will solve the situation is the miner’s ability to demonstrate that he has completed the necessary job.

The network’s overall computing capacity determines how much power must be used. Proof of work is an excellent approach to maintaining the decentralized nature of the blockchain. But this also makes it challenging to execute transactions more quickly.

Decentralization: what is it?

The US dollar is under Federal Reserve supervision. However, this also holds for most of the world’s central banks that manage fiat currencies. If they want to print additional USD, can you ask them anything? Nope, you have no chance. Furthermore, these organizations rarely consult the general public when making decisions, and occasionally their interests diverge from those of the general public.

Decentralization means sharing power across system users instead of having a small number of people in charge of running things and making decisions. This is just one of the factors driving the uptake of cryptocurrencies. The blockchain scalability issue in the existing blockchain ecosystem worsens as more users join the network.

Here, we discuss various innovative solutions to the scalability issue with blockchains.

1. Payment Methods

The blockchain will not be used for every transaction; instead, a payment channel will be established between several companies. Any channels may be opened between the users, merchants, and miners of the network. Furthermore, a medium may be closed at any time.

Only a payment channel’s opening and closing will be recorded in the blockchain. Please take this as an example to see how it functions.

The network comprises five individuals: Alice, Bob, Charlie, David, and Ellen.

Between them, Alice and Bob established a payment channel. Bob has thirty bucks, while Alice has five dollars. These $35 are now secured in a safe. When the track is opened, the safe is produced. Instead of a direct transfer, the ownership of the money shifts when Bob wants to send $5 to Alice. The cash remains in the safe. The safe is opened when the payment channel is closed. Alice will receive $10. Bob will also receive $25 because he transferred $5.

But how can Alice give David or Ellen money?

There are 2 methods.

  1. Along with David and Ellen, Alice establishes a new payment route.
  1. If not, assume Charlie and David have already established a channel. Additionally, a payment channel has been established between Charlie and Bob. Here, payment channels communicate with one another. Alice’s transaction with David and Ellen goes through Bob first before being forwarded by Bob to Charlie. Charlie will finally transfer the funds to David and Ellen.

The speed of the payment network increases with the number of available payment channels. Additionally, blockchain note transactions are occurring less frequently. Consequently, there are fewer transactions on the blockchain. Thus, the transaction processing becomes incredibly quick. This method is known as the Lightning Network for Bitcoin. The Raiden network is what it is for Ethereum. Both implementations have the same fundamental idea.

Also Read: Blockchain Scalability Solutions

  1. Sharding for Scalability in Blockchain

Sharding divides the miners into numerous groups (shards), and each group is then assigned a distinct set of transactions to handle. To simultaneously publish one block, each group works independently. The pace of transaction validation increases when more blocks are routinely issued. Additionally, these shards often communicate to prevent double-spend transactions from receiving approval.

Here is an example of a double-spend transaction.

I have ten dollars, Alice. She also sends Bob ten dollars. A message to confirm this transaction is delivered to Shard1.

Despite having no money, Alice immediately sends Charlie a fraudulent transaction for $10. Because Shard1 has not yet verified Alice’s transaction with Bob, which means Bob has not yet received the money, it is feasible. Furthermore, Alice is spending money she doesn’t have, which is against the law.

Now, Alice’s transaction to Charlie has been received by Shard2.

Shard1 and Shard2 miners may approve the two transactions if they don’t frequently communicate. And it transgresses the laws governing the financial system. Therefore, the shards must continue to share often to stop fraudulent transactions.

However, smart contracts, self-executing programs, are more suited to solving this issue. The amount of balance Alice will be known through a smart contract. The smart contract will automatically prevent Alice from sending the second forgery when making a transaction. Additionally, it will never go to Shard2. 


The solutions that hold the most promise for addressing blockchain scalability are Payment Channels and Sharding. And research and development on these are ongoing. Furthermore, this is just the tip of the iceberg. But the majority of existing options are still in their infancy. Only once a solution is implemented on a blockchain can we determine how much they contribute to scaling.