Scaling Problems in Blockchain

Scaling problem is the limitations of blockchain transactions in terms of volume and the ability to make fast and low-cast payments.

What is Scaling Problem?

Typically, scaling problems relate to limitations in blockchain capabilities that ultimately affect the speed and cost of transactions. The underlying problem is a scaling problem related to how the decentralized network handles blocks of transactions and depends on factors such as block size or block time. The reason for this is that users of Bitcoin, the first blockchain network, have experienced delays in transaction settlement and increased fees with the surge in network usage.

While unscalable blockchains can remain as they are, they will face detrimental consequences, such as a steady decline in transaction speeds and increased costs, and users leaving for more scalable networks. This has a ripple effect, as a lack of users could prevent developers, businesses, and miners from moving forward.

Bitcoin limited its block size to one megabyte (MB) in 2015 and later increased it to 2 MB. Since the increase in block size, Bitcoin’s scaling problem has eased somewhat. However, most developers caution against changes to the protocol that could potentially make it centralized.

Since each transaction carries data, more transactions means more data per block, which will eventually lead to miners using huge amounts of disk space to store a full copy. As a result, the Bitcoin community decided not to increase block size because it traded decentralization for scalability, which many felt was the wrong approach.

Solving the growth problem was not easy. It took a lot of time, effort, and years of work. The scalability problem is compounded by the fact that expanding the blockchain network requires proper consensus and coordination among the various parties involved. This process can lead to a hard fork, where one team activates an upgrade and divides the underlying network.