Aug 22 • 5M

Episode 40 - Blockchain Scalability

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Episode details

Some of you must have seen on the internet that how Bitcoin and Ethereum and much slower than Visa and other centralized financial systems. The reason is blockchain scalability trilemma. Bitcoin and Ethereum have chose to be more secure and decentralized, and hence they have to give up scalability.

In the last episode, I spoke about the Blockchain Trilemma. About how blockchain could have only two of decentralization, security, and scalability at a time. I also mentioned that there are some approaches and solutions being implemented and researched to circumvent the trilemma. The main purpose of these solutions is to make the blockchains scalable while keeping them decentralized and secure enough.

Most of these solutions fall into the broader category of blockchain scalability solutions. In this episode, we’ll briefly take a look at some of these.

Sharding: The first of the blockchain scalability solutions is sharding. Basically sharding is about distributing the production and verification of blocks into a subsets of nodes so that all the nodes don’t have to do all the work for all blocks. To achieve scalability, we distribute the workload among the nodes using sharding.

Layer 2 Scalability: Layer 2 solutions are about offloading the computation and execution of transactions outside of the main blockchain. The blockchain is used for verification and state updates only. This way the heavy work of computation is not done by the nodes of the blockchain. There are several layer 2 solutions — rollups, side-chains, etc.

On a broader level, these are the two main categories of blockchain scalability solution. However, there are several sub-categories of with different approaches towards sharding and layer 2 solutions.