How Plasma Solves Ethereum Problems

How the real-world application of cryptocurrencies will be implemented and thus successful depends on the ability of cryptocurrencies to scale. The two major currencies, Bitcoin and Ethereum are both very limited if you see the how fast and how much transactions they can make. This can lead to a single application destabilizing the entire network. You can compare this problem with the Visa credit card. The provider handles more than 2000 transactions per second and Ethereum is stuck at handling about 15. So how can this problem be fixed?

Plasma is new scaling solutions that will help Ethereum reach more transactions per second. Plasma will make possible for off-chain transactions while simply relying on the ethereum blockchain for security. Plasma goes even further by allowing for smaller blockchain to be attached to the main one. These small blockchains can also create their own blockchain and it basically becomes branching of the blockchain.

This way a large number of complex operations can be performed on the small chains than on the big one, allowing for developers to create and run applications easily. Plasma can work faster with low fees.

Now let’s talk about how secure plasma is. Plasma guarantees that each party can withdraw their assets back onto the main chain whenever they want.
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So, if an attacker tries to take control, the worst that can happen is you leaving the smaller sub-chain.  This is called a Plasma exit mechanism which allows for users to stop participating in the sub-chain and move to the main one.

In general, plasma offers many benefits. It helps Ethereum to handle more transactions, it allows for great applications to be run on the blockchain because of the increased capacity, it can speed up transactions, offers lower fees, gets rid of unnecessary data, improves ledger scalability.