Scalability is one of the biggest challenges in the crypto industry. Although it’s essential for blockchains and networks to function at their best, sustaining them concurrently with the rise of user activity poses significant difficulties for worldwide nodes, developers, and miners.
Hence, blockchains are continuously working on solving the scalability trilemma, which is a network’s maximum capacity to provide only two of the three distributed ledger technology features ―scalability, security, and decentralization. Most blockchains are secure and decentralized, but they struggle with scalability.
Indeed, developers’ continuous efforts to make crypto more accessible succeeded. For instance, if you check the current Bitcoin price for purchasing, you have plenty of purchasing options, from a debit or credit card to a peer-to-peer service. So, we can forecast that Bitcoin will become more affordable and more accessible to acquire in the future.
But how will the scalability problem affect its transactions? And how can developers tackle this issue? Let’s find out.
How does scalability affect Bitcoin?
Bitcoin’s capacity to handle a certain number of transactions hasn’t changed much since its beginnings. For instance, its block creation time is ten minutes, and its size is only one megabyte. This has caused several bottleneck situations in the past, making Bitcoin often an inefficient cryptocurrency. So, people sought alternatives like Litecoin since transaction fees and processing times were enormous.
Over time, many propositions and projects were developed to make Bitcoin less ineffective. Unfortunately, network congestion posed many other risks to the blockchain, including the increasing possibility of double-spending attacks. In addition, high transaction fees would push miners to centralize their forces to minimize costs.
What are some of the scalability solutions for Bitcoin?
Although no one can change Bitcoin’s design, developers’ efforts have enabled new improvements to the underlying technology and added a few scalability-focused solutions. For example, Layer 2 technologies address different sides of scalability.
Sidechains, for instance, are blockchains parallel to the main chain, with cryptocurrencies pegged to Bitcoin. Their use cases include enhancing scalability and interoperability by facilitating cheaper and faster transactions between blockchains.
Bitcoin also uses side channels, such as the Lighting Network, which connect parties to allow them to transact with Bitcoin. In addition, side channels open and close during the process, speeding it up as everything happens off-chain.
Finally, rollups compress more transactions, so they don’t take up much space on the network. Optimistic and ZK rollups are powered by smart contracts to decrease transaction size, while sovereign rollups are based on nodes.
What would other solutions sound like?
While these are official scalability solutions, developers have proposed many improvements to adjust them over time. Such ideas need time for implementation and testing so they might be implemented on the networks in the future.
For example, centralized servers for off-chain transactions could ease the massive number of Bitcoin transactions, as the said business can broadcast the transactions on the internal ledger instead of the official blockchain. However, centralization implications aren’t ideal when it comes to cryptocurrency, as its purpose was to be decentralized.
There’s also the idea of open transactions based on a federated server model, in which transactions are untraceable, and there’s no network latency. The technologies used in this case include non-repudiable contracts and digital signing.
How are other blockchains tackling the scalability problem?
Bitcoin isn’t the only one struggling with scalability. Ethereum, for example, dedicated an entire set of upgrades to solve this problem, but it’s far from ending it altogether. Vitalik Buterin developed the Ethereum roadmap to introduce new updates that would handle various problems with the network, including scalability. The Merge was the first update, and it successfully reduced its energy consumption by 99.5% while switching from the consensus mechanism PoW to PoS, making it faster and more efficient.
On the other hand, Solana is using ZK Compression to enhance scalability by allowing developers to compress account states into one on-chain account. Using SNARKs and Merkle proofs, Solana reduced its storage costs without the need to introduce layer-2 solutions or compromise security.
Finally, the BNB Chain scalability measures comprise a mix of technologies, such as BSC sidechains, through which developers can build application-specific blockchains and support the growth of sectors like DeFi, Web3, and NFTs.
Is scalability more important than decentralization and security?
Many developers are trying to solve the blockchain trilemma by making it possible for networks to achieve all three features. However, considering how much effort is made in this direction, we ask ourselves if scalability is more necessary than the other two.
Scalability is vital for any network, as it facilitates transactions, which comprise the core of cryptocurrency and blockchain. Still, buying and selling crypto in an unsafe environment could considerably affect the industry. In addition, if the network is shifting towards centralization, there’s no point in considering it part of the crypto world.
Instead, we can say that scalability costs are the least influential on a network’s efficiency, even though it slows it down considerably. The risks of a centralized or unsecure blockchain could be more detrimental to the industry.
The blockchain trilemma might be solved in the future
Luckily, as the crypto industry expands, the demand for specialized professionals increases, meaning that in the future, we’ll have more specialists in blockchain technology who can solve the blockchain trilemma. This is also necessary if we want blockchain and cryptocurrency to be adopted worldwide because this would require the networks to be able to sustain the global transitioning purchasing power.
What do you think about the blockchain trilemma?
The blockchain trilemma is a challenge developers try to solve for some of it, implying that no blockchain can simultaneously be decentralized, safe, and scalable. While maintaining the network secure and decentralized is quite approachable, ensuring its scalability at all times proved to be highly difficult.
Therefore, blockchains like Bitcoin are affected by high transaction fees and higher processing times. To solve this issue, developers worked on scalability solutions like side chains, side channels, and rollups to compensate for Bitcoin’s slightly flawed design.
