Blockchain and scalability

Question

I'm doing some research about the problem blockchain applications is facing (scalability).

At the moment I'm reading: https://hackernoon.com/blockchains-dont-scale-not-today-at-least-but-there-s-hope-2cb43946551a

There was something I got stuck on.

"The number of transactions the blockchain can process can never exceed that of a single node that is participating in the network."

Is this correct? Are we talking strictly about PoW? I can't seem to understand this.

I tough the highest transaction throughput is capped at maximum block size divided by block interval.

Answer 1

Validating a single transaction is relatively inconsequential. This is not the same as "mining" a new block with Bitcoin's PoW algorithm. Validating a transaction usually means confirming that a cryptographic signature is valid, as well as some other data validation. This can be done quickly, but adds up as you get more transactions. On the other hand, mining a block means brute forcing a hash, and is extremely CPU intensive. However, this only needs to be done once per block for the whole network.

The article is well written, and accurate as far as I know. Blockchains as they currently exist will be limited to a relatively low transaction throughput, probably not more than a few thousand per second. This will be fine for many use cases, but will likely prevent them being used for high rate applications like a stock market.

Answer 2

This is true for a blockchain network based on a single chain. Security of any blockchain network is based on full nodes which do a full verification of block-candidates according to protocol rules. That is a reason why transaction throughput can't exceed aforementioned limit without some trade-of.

This is true for PoS networks too. However, calculation of this limit for PoS networks is more sophisticated.

Many projects attempt to resolve this problem by splitting the blockchain into multiple chains or shards. However, these shard chains remain heavily interconnected. Thus state splitting there often appears to be an illusion.

I suggest you to take a look at JaxNet protocol.