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.
