June 12, 2019 Knowledge Center

Explaining Sharding for Blockchain Scalability

When programmers build decentralized apps (DApp), they are bound by the limits of public blockchains. Their biggest limitation is having limited throughput — the maximum rate at which the blockchain can confirm transactions. To be able to manage a DApp that can take care of real throughput requirements, blockchains need to be scalable.

Sharding is a workable answer to blockchain scaling. It has the potential to increase the throughput and change the way networks validate blocks — all the finished transactions that are permanently recorded in the blockchain. Horizontal scaling is the most vital feature of sharding among all on-chain scaling solutions.

What Is Scalability?

Scalability is a system characteristic which describes how well the system copes and performs with an increasing workload. Any system that scales well can sustain its high performance rate or raise its efficacy despite an increase in operational demands.

To understand scalability better, take the example of a bank. In a well-managed bank, the customers can walk in, go to a clerk, have their transactions quickly taken care of, and leave without waiting or queuing. But, at the beginning and end of the month when customers overcrowd the bank, how will they serve the customers quickly?

Often times, no matter how fast the clerk is, they will not be able to keep up. Likewise, the other bank staff will also be overloaded with work. Situations like these are perfect examples of an institution’s inability to adjust and satisfy customers when demand increases.

Like the example of a bank, scalability issues are also one of the most significant challenges the Bitcoin blockchain industry faces today. Therefore, any discussion about the future of blockchain needs to address these technology scalability issues.

The Need to Scale the Blockchain

In just a few years, the use of public blockchains such as Bitcoin or Ethereum has grown exponentially. Nowadays it is not unusual for Bitcoin transactions to take hours to complete, while Ethereum is having to shoulder the pressure of more and more decentralized applications each month.

This raises an urgent demand to concentrate on scalability. So, what solutions are significant players in this space devising to solve the scalability problem?

One suggested solution is to develop potential fee markets because they are vital for adopting these practical solutions. As the fee grows, economic incentives push users to other platforms that provide superior technology.

Another short-term approach suggests having segregated witnesses use diverse accounting for several data types in the blocks. Thus, it will result in a moderate and temporary block capacity increase.

There are also projects that trade off decentralization for a rise in scalability as a compromise. The network consists of different categories of nodes — the basic building block of cryptocurrency — that have differing privileges. A multi-tier system of this nature lessens resource requirements at the expense of introducing a degree of centralization. Though it can be easily challenged theoretically, the solution is effective on several platforms.

What Is Sharding?

Sharding is a well-known technology in the cryptocurrency community. For many years, it has been important in traditional technologies. Recently, it has gained ground in the blockchain community and is implemented in solving blockchain scalability issues.

It is a category of database splitting which divides larger databases and positions them into smaller, faster, and more easily handled portions referred to as data shards. Most often, basic sharding data is quite easy. It is like saving customers’ information on different servers based on their geographical location.

However, in blockchain technology, sharding implementation is more complicated. This is because traditional blockchains demand that every node carry every data on the blockchain. Despite its complications, blockchain projects on this model are trusted because it is a secure way of validating transactions.

A vital way to understand the practical limitations of sharding is to have a basic understanding of consensus algorithms. And Proof-of-Work (PoW) algorithms are particularly used to provide security.

Sharding Strategies

There are many granular methods to implement sharding strategies.

Some of them are:

  • State sharding – This is a prospective solution-oriented approach. It consists of splitting the whole storage into portions so that different shards can store different portions. That means that all nodes host their data shard instead of the whole blockchain state.
  • Network and transaction sharding – In this strategy, blockchain network nodes get split into diverse shards. Each of those shards is formed to process and reach a diverse subcategory of transactions.

Furthermore, on typical public blockchains, every public node supports the weight of smart contracts, storing transactions, and many states. But the process could be costly as it needs more storage space to maintain continuous blockchain operations.

Conclusion

Sharding presents promising solutions to scalability problems. Although it is still in its early stages of testing, the state sharding done to the Ethereum network is impressive considering how vast and decentralized this network is. If the developers are able to implement sharding successfully on the Ethereum network, it would be a noteworthy achievement.

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