The blockchain scalability issue
Scalability is the ability of a system to handle growing amounts of data. Scalability of a blockchain refers to how well it can manage a growing volume of transactions. The primary cause of the problem is that everyone using the blockchain must concur that a transaction is genuine.
Currently, Bitcoin can process 7 transactions per second (TPS), which is known as its throughput. With about 30 TPS, Ethereum is occupying a marginally higher position.
These figures don't seem too bad at first, but they pale in comparison to Visa's throughput, which may reach up to roughly 1,700 TPS.
The distinction between throughput and process speed must also be understood. Despite having a TPS of 7, Bitcoin requires 10 minutes to process each block. Another name for this is finality. To guarantee that blocks are irreversible, there is a set delay. No matter what the throughput rate, you will always have to wait.
Due to the miners' confirmation requirements, transactions on the Bitcoin blockchain can take up to 90 minutes to process. Therefore, when they claim 7 TPS, they don't mean you can transmit cryptocurrency to seven distinct recipients and expect it to be processed instantly.
Solutions for Blockchain Scalability
Blockchain is rigorous by nature, making it very challenging to change one component without doing so on the entire system. We have forks and sharding because of this, where the action is carried out elsewhere.
Scalability has been addressed by developers by building totally new chains that link to the primary blockchain. These are what are referred to as Layer 2 or off-chain solutions.
Off-chain remedies
The majority of transactions are handled via layer 2 solutions, which are constructed on top of the main blockchain. Throughput will increase and network congestion will be decreased as a result.
Sidechains
Although they operate as separate networks, sidechains connect to the primary blockchain directly. From the main chain, they can offload transactions and other duties. The same main chain can be connected to a large number of sidechains, each with its unique architecture. This kind of scaling technology is used by Ethereum's Plasma scaling solution.
Payment options
Off-chain networks known as payment channels enable peer-to-peer transactions using smart contracts.
Users can build a channel for a modest cost through which they can conduct private business and send money to one another. Smart contracts control the activities in payment channels, so there is no need for international agreement.
Once the transaction is complete, users can terminate the channel and update the main blockchain with the transaction's status. The Raiden protocol for Ethereum and the Lightning Network for Bitcoin are two of the most well-known payment channels.
The blockchain community is constantly developing fresh concepts and strategies to boost its effectiveness. In the not-too-distant future, we could even discover the answer to the scalability problem, but we are unsure of how much it will cost. It may be preferable to improve what blockchain does best, creating a safe, decentralized financial system for all.