Scalability
Blockchain has been growing rapidly. The number of use cases is expanding across verticals. Organisations working on POC, those who have done POC and going ahead with pilot projects and have moved to live use cases realizing its potential. But Scalability as a whole is not addressed and different solution to overcome it are yet to still provides a satisfactory solution.
Bitcoin and Ethereum have been growing exponentially.
About graph displays number of daily bitcoin transaction over the years. But as more participant would join the network, it would be immense workload of incoming transactions requests per second.
The question arises whether Bitcoin and blockchain in general in its current form ready for mass adoption?
Visa manages around 1800 transaction per second, bitcoin with only 7 transaction per second and Ethereum with 15-20 transaction per second. So, Scalability is a tough road ahead.
Main reasons behind these throughput numbers in Bitcoin and Ethereum :
Time taken in reaching consensus among miners (or validators in some algorithms)
As more participants join the network and request transactions, In a flat topology like blockchain with no central entity, each party has to agree that a certain transaction happened.
For this, the network follows gossip protocol.
In Gossip protocol, each node in the network communicates it neighbouring node that a particular transaction happened which next node communicates to its peers. But in blockchain, nodes follow a trustless system. Just because Node A says that transaction happened, B will not believe, node B would check on its existing ledger and verify.
This system of propagation happens until the last node in the network verifies.
Consensus happens in a linear fashion.
So, more nodes on the network reduce transaction times.
Time taken to create a block
As a participant on the network will grow, so the need to update their ledgers for each of them also consumes time. Transaction request over the network will reduce the bandwidths and will need faster internet mechanisms.
Solutions To Scalability
Many Blockchain protocols have come up with many solutions like DAG algorithm (Multiple block creation at the same time) for consensus. Similarly, Bitcoin and Ethereum have come up with few solutions which are listed below:
Study Material