The blockchain scalability issue is related to the limits on the number of transactions a blockchain network can perform. Usually, blockchain transaction throughput is measured in transactions per second (TPS).
The root of the scalability issue is the determined size of a block (blockchain unit that contains data). Bitcoin is limited to 7 transactions per second. Ethereum, the second-biggest cryptocurrency, can handle near 20 transactions per second. At the same time, the banking system processes thousands of transactions each second.
Undoubtedly, the lack of scalability is one of the biggest issues slowing down the mass adoption of blockchain and cryptocurrency, including enterprise adoption. Scalability is required various aspects of the world economy, from payments to online gaming.
Bitcoin and other previous-generation cryptocurrencies are simply not designed to perform thousands of transactions each second. Just by adding more computing power or clients, Bitcoin can gain no additional transactions per second. Though Layer-2 solutions might be a way to achieve scalability, they are still under research.
But there are cryptocurrencies can bring solutions to the scalability issue.
Blockchain Advanced Scalability Solutions
The proven way to make a blockchain is to implement blockchain sharding. Sharding is a method based on splitting a blockchain into several parts. Those parts are called shards. They are autonomous enough to process transactions and store data, but at the same time, they are interconnected parts of the network.
Sharding is effective and still undervalued technology in crypto space. Yet, there are several projects that had implemented blockchain sharding successfully — for example, Zilliqa and Harmony. Zilliqa is the first public blockchain that implemented sharding. Now, the test results show 2828 transactions per second. A significant milestone, but it is just a beginning. How is Zilliqa network able to achieve such significant results? You can find out in this Zilliqa review.
Another way to achieve advanced scalability is by utilizing DAG architecture. DAG, or directed acyclic graph, is a kind of distributed ledger technology. It is similar to blockchain. The main difference between DAG and blockchain is that in DAG blocks are connected in a linear consequence like in blockchain. Implementing DAG results in enormous transaction throughput. Basically, the number of transactions in a DAG-based network is calculated in tens of thousands. The examples of DAG-based cryptocurrency networks are IOTA, Fantom, and others.
The total amount of highly-scalable cryptocurrencies is relatively low. However, most of them are serious projects with groundbreaking technology and solid research. One of the recent cryptocurrency projects focusing on scalability is Algorand. This project has attracted a great deal of attention, but how advanced are solutions it brings? You can find a good Algorand review here.