Sharding Breakthrough Could Solve Ethereum’s Scaling Issue and Boost ETH Price

Ethereum investors may finally have a comeback for those critical of the blockchain’s scaling issues. Despite ETH being the second most valuable cryptocurrency in the world, those outside of the Ethereum club are quick to criticise its insular nature. When you look at how Ethereum (ETH) works, the blockchain itself is a fantastic example of smart contracts in action. However, the number of transactions it can process per second is still limited.

The blockchain itself is managed by a network of nodes (which in turn make it decentralised) which store information about the entire Ethereum transaction history. In one sense, this is a positive because it means each node stores the same information, so even if one goes down, the rest of the network isn’t affected. However, because new blocks of transactions are being created every ten seconds, the amount of information being stored on each node is also increasing. The end result is that only so many transactions can be processed per second.

Bigger Blocks Mean Bigger Problems for Ethereum

It is technically possible to increase the size of a block to contain more information. This would allow it to hold and, therefore, process more transactions in a single hit. However, nodes would then be required to hold more information. As with any type of data storage solution, the more information there is, the more effort it takes to process it all. Therefore, increasing the size of a block would make it harder for users on the network to process transactions. In other words, only large companies with the necessary resources would be in control of the nodes.

If that were to happen, decentralised blockchains like Ethereum would start to look a lot more centralised. This issue is one that’s plagued the price of ETH in recent months. Although you can look at the structure of Bitcoin (BTC) and make the same claims about scalability, it seems the issue has hit Ethereum harder than most. Although its creator Vitalik Buterin recently said that the blockchain sucks because the price of ETH is being buoyed by investors rather than innovations, scalability is also a problem. However, things could be set to change.

Coders Crack the Scaling Code

During a recent Ethereum hackathon at EthBerlin, Vlad Zamfir claims to have created a successful proof-of-concept for sharding. Working with Tim Beiko, Steve Marx and coder “maurelian”, Zamfir said that his code is able to facilitate communication between different shards on the Ethereum blockchain. Although he recently told CoinDesk that the technology is far from ready, he did say that it solves many of theoretical issues with sharding.

“It’s really a proof-of-concept of the most core component in my sharding roadmap. It prevents the cross-shard atomicity failure, or more specifically, it prevents finalization of cross-shard atomicity failure, so it will never be that a ‘send’ is finalized and a ‘not received’ is finalized,” Zamfir told CoinDesk.

In simple terms, sharding would allow the Ethereum network to be broken up into smaller chunks. These chunks would operate semi-autonomously but also link to the blockchain as a whole. The benefit of this is that more information could be processed through the network which would then allow it to complete more transactions per second. While the sharding solution is unlikely to be ready for some time, the announcement shows that Ethereum developers are working to address the scaling issue. That on its own should help boost the price of ETH. Indeed, when you combine this with recent mining changes, the future is looking a lot brighter for the project. Yes, there are still a lot of hurdles to clear until Ethereum is a truly useful blockchain on a global scale. However, things are moving in the right direction.

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