Blockchain Scaling Problem: 3 Possible Solutions

Every blockchain has one very familiar characters and that is, of course, decentralization. Why is this important to know? All cryptocurrencies such as Bitcoin, Ethereum or Ripple are very limited: every node that takes part in the network must process every single transaction. When every node processes every transaction, the node keeps a copy of all the information. So, there cannot be more transactions made than a single node that takes part in the network. This also means that if more nodes are added to the network, the blockchain will get weaker. So in order to scale, every blockchain protocol must find out a mechanism to limit the nodes that participate in each transaction and at the same time to try not to lose the network’s trust.

There have been, however, some proposed solutions from both Bitcoin and Ethereum which some have already been implemented. We’ll just name a few here:

1. Segwit

Short for Segregated Witness is a mechanism that changes how data is stored. The way it works is by increasing the block size limit by removing signature data from BTC transactions. This way you get free space and a bigger capacity.

2. Proof of Stake

PoS is a mechanism that allows people to validate block transactions or mine depending on how many coins a person has. Thus, the more coins owned, the bigger the mining power. PoS is one of the most common solutions.

3. Plasma

Plasma is also a possibility to solve the scaling problem. The way it works is that Plasma removes unnecessary data in the chain. It will only transmit completed transactions to the public Ethereum chain. This way more power is saved and it lowers down the expenses.