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Scalability and the Enterprise Blockchain

With expectations of the global spend on blockchain solutions crossing a whopping $9.7 billion by 2021, from $945 million in 2017, solutions that are able to solve the scalability challenge will prosper. Blockchain is well on its way to revolutionizing almost every industry and yet scalability continues to be a challenge across enterprise level systems. When it comes to this challenge, however, merely looking at transaction speed is not enough, although confirmation speed does play a major role.

The Challenge of Scalability

An inability to address the scaling issue will have far-reaching consequences.

  1. Transactions will take increasingly longer with greater adoption. If Visa is already offering 24,000 transactions per second (tps), Bitcoin’s 7 tps stands no chance. The risk is that even the most passionate blockchain enthusiast will hesitate to adopt the technology.
  2. In the absence of scalable systems, it will be impossible to add more nodes. However, increasing adoption means that there will be a much larger number of nodes required over time.
  3. One way to solve the scaling problem is to centralize at least part of the distributed ledger. This defeats the entire premise of using blockchain.

In short, with increasing adoptions and transactions, the systems will become significantly more expensive, slower and unsustainable. This means, blockchain ecosystems will need to focus on being able to include a growing number of nodes, without it affecting speed or efficiency. The challenge of scalability is about not just transaction speeds but, more importantly, the size of the ecosystem. But, before we consider a viable enterprise blockchain solution, we need to address a key issue:

Scalability Solutions Already in Use

Even with the use of the basic Byzantine-fault tolerant protocols in permission-based blockchain, scalability remains an issue. The number of nodes that can be set up remain limited, since such protocols incur considerable communication complexity in order to reach agreement when a subset of the nodes is malicious. Here’s a look at some key solution that are being currently used.

1.Sharding

Sharding is one of the most popular solutions within the Ethereum community today. Basically, it horizontally partitions the database to allow scaling and load balancing. In terms of blockchain, it splits the chain into multiple chains. What this means is that the solution entails the nodes being organized into groups to handle subsets of transactions. This way a specific group can execute permission-based Byzantine consensus protocols to verify certain types of transactions, forming individual blocks. All these blocks are then merged into the blockchain by a separate group of nodes, following which the chain is updated with the new blocks.

The problem with sharding is that it adds complexities and introduces security issues, making the entire network vulnerable to a single point of failure. This is because sharding only addresses transaction processing. All nodes still need to maintain the entire blockchain history and all nodes will still receive all confirmed blocks.

2.Corda

This is a fairly recently proposed framework, which introduces the concept of “flows” to enhance privacy. It established point-to-point connections between all the nodes involved in a specific transaction. This allows the transaction to only be visible to the participating nodes. Based on Bitcoin’s UTXO model, Corda takes the existing ledger entries as inputs to create new ledger entries as outputs. On receiving a new transaction, the nodes confirm the entire transaction graph.

The challenge with this solution is that it allows privacy, but only for message transmission, which is independent of the achievement of consensus. This means that the entire transaction history will need to be looked into to check for double spending.

The NEC Solution to the Scalability Challenge

NEC’s enterprise blockchain solution has been specifically developed to meet scalability needs, while also ensuring security and privacy. What NEC has been able to achieve is beyond mere transaction speed to secure asset transfer. The consensus protocol leverages ”satellite chains” to allow different consensus protocols to run independently, in parallel.

This definitely takes care of the scalability challenge that current solutions have been unable to overcome.

How this solution works is that the satellite chains are interconnected but function independently as part of a single blockchain system. Each satellite chain of the blockchain network has its own private ledger, which prevents any node that is not part of the satellite chain from accessing any transaction in its ledger. Scalability is ensured because there is no limit to the number of active chains at any given point in time, while different chains can run different consensus protocols, simultaneously.

Apart from the unparalleled scalability that this solution offers, it also allows the transfer of assets between satellite chains, without compromising on security, privacy or decentralization. It permits lightweight private sharing, separates agreement from execution and has a simple failure detection mechanism.

References

(February 28, 2020)

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