Powerful Scalability Begins with Sharding
Scalability is by far the most pressing issue yet to be addressed by blockchain. Without being able to accommodate the transaction loads imposed by its users, a blockchain is unfit for purpose.
What’s the problem
The two main blockchains, Bitcoin, launched in 2009, and Ethereum, launched in 2015, are crippled by a lack of scalability. Bitcoin can handle around seven transactions per second (tps), while Ethereum tops out at approximately twice that number. Per second. Compare this to Visa, an example of an effective and widely-adopted network, which is comfortably capable of handling loads of up to 24,000tps and a typical load of around 6,000tps. To truly act as a replacement for a network that can handle enterprise-scale transaction throughput, it’s immediately obvious that Bitcoin and Ethereum, and every other blockchain languishing at transaction capacities below 5,000tps, have some serious work to do.
It must be mentioned, however, that not all blockchains need to scale. Bitcoin can happily exist as a “store of wealth” without needing massive scalability. Banks successfully keep gold in their
vaults as a physical store of wealth without the need for rapid access and high throughput, and Bitcoin can perform the same role for digital wealth.
Scalability is essential
Yet similar to gold, Bitcoin fails as an everyday currency in that it’s impractical to use when buying groceries; the transactions are too slow—often taking many hours to confirm—and the network
cannot handle the load when flooded with even a modest number of transactions.
Other specialist blockchains, such as Monero, also don’t necessarily need to prioritize scaling. Monero’s primary focus is on ultra-private transactions, and the overwhelming majority of
blockchain users don’t require that level of privacy on a regular basis.
Expressed differently, hiding the fact that you bought a box of icing sugar and a bunch of mixed herbs at the supermarket isn’t a priority, while hiding the fact that you bought five grams of
Columbia’s finest and a quarter pound of weed from an online drug dealer is.
As such, Monero can get away with passing the buck when it comes to scaling, as it’s capable of handling the specialized types of transactions and transaction loads for which it was designed.
In particular, Ethereum’s shortcomings in the scalability department have brought the issue to the forefront of blockchain development. During 2017, at the height of the ICO boom, the
Ethereum network was frequently brought to a virtual standstill by thousands of simultaneous transactions, resulting not only in frustrated investors, but also frustrated users whose unrelated
activities were hindered by the congestion. Similarly, the popular “CryptoKitties” game recently brought the Ethereum network to its knees, with tens of thousands of transactions queued and delays of up to twelve hours. Clearly, this problem has to be solved before blockchain can progress to the next level.
To their credit, efforts are being made by Bitcoin and Ethereum to address the scalability issue, with projects such as the Bitcoin’s Lightning Network, and Ethereum’s Raiden and Plasma. These
solutions, however, are “bolt-on” efforts to patch over a fundamental issue with the underlying blockchain. Furthermore, internal politics and bureaucracy within the Bitcoin and Ethereum
communities makes progress towards adopting a solution extremely slow.