A Guide To Sharding – What Is It And How Will It Change Crypto Scalability?

Any programmer who has ever created a dApp at one point has to consider the limitations of current public blockchains: the most important and obvious thing is that their throughput is limited, such as the number of transactions processed per second. To be able to run dApps that can meet real throughput requirements, the blockchain must be scalable.

In this article, we are going to discuss what sharding is, the scalability problems some existing blockchain protocols face, and how sharding can be a reliable solution to the scalability problem.

What is Sharding?

Sharding is a partitioning method that distributes compute and storage workloads across a P2P network, so each node is not responsible for handling the transaction load of the entire network, but only manages information related to its partition (or shard).

Sharding is particularly beneficial for blockchain networks as it allows them to reduce latency and data congestion by breaking the network into smaller partitions and allowing them to process more transactions per second. Sharding is required, especially when the data set is too large to be stored in a single database, and given the numerous projects and developers built on its network, this is indeed the case with Ethereum.

The Issue of Scalability

One of the biggest problems facing public blockchain platforms today is scalability. Some popular platforms struggle to process large numbers of transactions per second. In fact, today’s public Ethereum and Bitcoin networks can process an average of 7-10 transactions per second.

Slow transaction processing is a big problem as it clogs the network and makes it difficult to use blockchain for applications like real-time payments. The longer the payment processing takes, the more inconvenient it is for the users of such platforms.

As the number of transactions increases, the size of the ledger also increases, resulting in more and more data being processed and stored on each node. Deploying additional nodes makes the problem worse because it takes more time to validate. Since every node must process every transaction, as latency increases, throughput decreases, and storage costs increase, users inevitably experience performance and reliability issues.

In most chains like Bitcoin and Ethereum, nodes are run by the public. Although the decentralized consensus mechanism offers some important advantages such as fault tolerance, security, political neutrality, and authenticity, this method of checking the chain comes at the expense of scalability. As these public blockchains get larger, more and more computing power is required to validate them, which can create bottlenecks in these networks and slow down the creation of new applications.

Sharding to the Rescue

Sharding is a scaling technique that is inspired by the traditional concept of database sharding, which means that the database is divided into several parts and placed on different servers. In the context of a public blockchain, the transaction load in the network is divided into different shards, which consist of different nodes in the network. Therefore, each node processes only a small part of the incoming transaction and is processed in parallel with other nodes on the network. Breaking the network into fragments results in more transactions being processed and verified at the same time. Therefore, as the network develops, it becomes possible to process more and more transactions.

Implementing shard-based blockchains can bring various benefits to public blockchains. First, thousands or more transactions can be processed every second, which would change people’s perception of the efficiency of cryptocurrency as a payment method. Increasing transaction throughput will bring more and more users and applications into the decentralized system, which in turn will encourage further use of the blockchain, making mining more profitable and attracting more nodes to join the public network.

In addition, sharding can help reduce transaction costs by reducing the amount of processing required to verify a single transaction; Nodes can charge a lower fee, but the operation is still profitable. By combining low fees with high transaction processing capacities, public chains are becoming more and more attractive for real use cases. The more these positive trends continue, the higher the mainstream adoption of cryptocurrency and blockchain applications will be.

Conclusion

Scalability is still a major challenge for implementing public blockchains, and sharding is becoming one of the most important ways to solve this problem. However, sharding needs to be handled carefully to ensure that it does not negatively impact the blockchain process or compromise data.

It may turn out that blockchain sharding will have to be implemented in conjunction with other technologies — such as new protocols for communicating across shard borders — to deliver the necessary scalability. Until then, public blockchain storage will likely remain the monolith it is today, with performance degrading as it gets bigger. Only time will tell how effective this will be towards blockchain scalability.

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