Perspectives
Blockchain And Its Scaling Problem
By Shawn Mahon | March 10, 2021 | 6 min read
How centralization of the blockchain undermines the technology, and what are some ways we can address the issue.
The Centralization Risk
Public blockchains could change how computer networks communicate. Bitcoin's consensus algorithm of Proof-of-Work faces centralization risks through mining pools that concentrate computational power.
Proof of Stake
Proof of Stake allows participants to validate transactions by voting, using deposited collateral to ensure honest behavior. This improves scalability since validators share network responsibilities.
Off-Chain Solutions
Off-chain state channels conduct transactions outside the blockchain, recording only receipts on-chain. This provides significant improvements in cost and speed without slowing down the network.