In this series I want to explain some terms that are relevant to the amazing world of cryptocurrencies to help newcomers understand it better. Today I want to talk about what sharding is.
Previous Parts:
Crypto Basics #1: What even is a Blockchain?
Crypto Basics #2: What are Smart Contracts?
Crypto Basics #3: What is a Cryptocurrency Wallet?
Crypto Basics #4: What is Mining and Proof of Work?
Crypto Basics #5: What is Staking and Proof of Stake?
Crypto Basics #6: What is a Decentralized Exchange? And how do they work?
Crypto Basics #7: What are Stablecoins? And How do they work?
Crypto Basics #8: What are Coins and What are Tokens?
Crypto Basics #9: What even are NFTs?
Crypto Basics #10: What is Yield Farming and Liquidity Mining?
Crypto Basics #11: What is the Bitcoin Halving?
Crypto Basics #12: What is a Fork in the Crypto World?
Crypto Basics #13: What is Impermanent Loss?
What is Sharding?
blockchains can only validate a small number of transactions per block and can only create a small number of blocks per minute. This is a problem because if many people are using the chain at the same time it can cause their transactions to take a long time to be processed and finalized. This means that cryptocurrencies couldn't be successfully adopted for everyday transactions until there is a solution for this.
Sharding is a special technique that is trying to solve this issue. It basically works by splitting a blockchain into multiple smaller blockchains, or shards, that are all connected and they are processing transactions in parallel. This can multiply the number of blocks and transactions that the network can handle by utilizing more validators of which most would otherwise just wait until one of them created the current block.
In most other chases, blockchains only become more scalable by limiting the validators to very powerful computers, which makes the network more centralized. This is known as the "Blockchain Trilemma" which states that a blockchain can only have 2 but not all 3 of these attributes: Scalability, Security and Decentralization. Sharding seemingly solves the trilemma because with more validators it becomes more decentralized and it could also create more shards to become faster without sacrificing its security.
This method was first used by the Zilliqa blockchain and it was later also adopted by and Ethereum 2.0 will also utilize it to become more scalable because its founder Vitalik Buretin is also a fan of sharding.
The exact mechanics of how the sharding works is different for every project that is using it. In some cases the validators need to hold data of the entire network while in others they only need to interact with the shard they are mining on. Some sharding blockchains have a smaller number of shards, while others have more. Most sharding blockchains use Proof of Stake but some are also using Proof of Work. The only thing that all such blockchains have in common is that they are relatively fast due to processing multiple transactions in parallel.
I hope that short explanation was helpful for some newcomers. I will keep writing more such short articles about various crypto terms. Feel free to follow me if you are interested.
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