Blockchain Stability

The recent popularity of cryptocurrencies has caused a host of issues in the blockchain community. One of those issues is the scalability of blockchain. The number of transactions per second for popular payment systems like Visa and Paypal is 24,000 and 193 respectively while Ethereum still stands at a meager 20 (Valuewalk, 2018). The Ethereum blockchain is theoretically capable of 1,000 transactions per second, but the total transactions per block cannot exceed 6.7 million units of computational power, a gas limit which caps the number of transactions (Rosic, 2017). The approval of participants, or nodes is also required to reach a consensus in the network (Rosic, 2017).

Just because Node A says its valid doesn't mean Node B will agree, and will do their own set of calculations. As you can imagine, the more number of nodes, the longer it will take. Thus, two main problems must be solved for blockchain to compete with current payment systems: the time taken to input a transaction and to reach a consensus.

A proposed solution to this issue is sharding (Jia, 2018). Sharding breaks down a transaction into shards and spread it throughout the network while nodes works on these individual shards. This reduces the overall time taken as it eliminates the need for each node to download the entire blockchain. While there are other proposed solutions, it is all still in its early stages before solving this issue of scalability.

Reference

1.) Transactions Speeds: How Do Cryptocurrencies Stack Up To Visa Or PayPal?. (2018). Retrieved from https://bit.ly/2jAMymA

2.) Rosic, A. (2017). Blockchain Scalability: When, Where, How?. Retrieved from https://bit.ly/2HV3YZL

3.) Jia, Y. (2018). Op Ed: The Many Faces of Sharding for Blockchain Scalability. Retrieved from https://bit.ly/2KrhGkD

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