The incorruptible digital ledger, Blockchain is one of the most impactful technologies of this decade. Once started off as the technology behind the cryptocurrency Bitcoin, Blockchain is now powering-up enterprise data solutions in integration with modern technologies like IoT and Artificial Intelligence. Many industry verticals such as financial and legal services have established successful Blockchain use-cases to enable tamper-proof transactions.
Due to Blockchain’s capabilities to enhance business efficiency and security, a large number of enterprises and organizations are now looking to invest in blockchain-based solutions. Around 60% of CIOs that participated in Gartner’s 2019 CIO agenda said that they expect some level of Blockchain adoption in their organization in the next 2-3 years.
Blockchain technology has also observed significant improvements over the years with the invention of Smart Contracts and Proof-of-Concept opening possibilities of its integration with IoT. However, just like every other technology, Blockchain also possesses some challenges that if overlooked can disrupt the performance of a Blockchain.
Factors that Affect the Performance of a Blockchain
The performance of a Blockchain network depends on scalability (the ability of the platform to increase load and number of transactions), and the time in which a transaction is validated and stored in each node of the network. However, apart from these, there are several other factors that can disrupt the Blockchain performance if not addressed properly, such as:
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Transaction Preparation Delay: All transactions in a Blockchain are digitally signed and any change in data would require permission and a transaction cost would be levied on it. Taking permission from different computers in the Blockchain may take a significantly higher time and may need a higher network bandwidth and storage size. Moreover, if the Blockchain is cryptographically advanced then any major changes may take tens of seconds or even minutes for processing. However, by clubbing transactions into one and by using EOS, developers are able to increase the TPS (transaction per second) up to roughly 4000.
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Consensus Mechanism: A consensus mechanism is a technique by which a transaction is validated and finalized in a Blockchain network. The consensus algorithm meanwhile determines the speed of a transaction acceptance and impacts a Blockchain network’s performance. When a block is added in a Blockchain it must be accepted by at least 1/3rd of block producers or as desired, however if not selected wisely, it can affect the overall transaction speed. To ensure new blocks added are valid and the transaction speed is also high, developers prefer to work on Proof-of-Stake mechanism where the miners that have the highest stake take the decision to add a block.
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Number of Nodes: As the number of nodes increases, the same message that could be transferred in seconds will now transfer in tens of seconds hence delaying the consensus and affecting the performance of Blockchain. However, developers are using techniques to minimize the communication overhead by allowing nodes to rely on the validation history of a leader node or by adding other peer nodes.
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Network Infrastructure: The Blockchain node consists of a runtime engine as well as a database that is hosted primarily on cloud or on-premise. And the performance of the node can get hampered in case the required resources i.e. CPU, Memory, and Hard Disk are not allocated properly. Organizations should ensure that proper resources are allocated for ensuring there is a higher output for Blockchain processing.
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The Complexity of Smart Contracts: The self-executing contract i.e. smart contract contains the terms of the agreement between buyer and seller in a decentralized and distributed Blockchain ensuring high security to both parties. However, the performance of Blockchain can be impacted if the smart contracts created have a complex validation logic. Hence, it is better off to keep the read/writes to and from the ledger to a minimum.
Performance of Current Blockchain Networks and Solutions for the Future
The public Blockchain networks including Ethereum and Bitcoin consists of millions of nodes due to which it takes considerably larger amounts of time to build a consensus between nodes. And with this, it causes a delay in finalizing a transaction leading to low throughput. Due to this reason, public Blockchains more or less lack performance and scalability and would need techniques like offloading the side chains to improve the transaction processing speed of the main chain.
However, businesses can increase the throughput by leveraging private Blockchain platforms where a consortium is developed with a lesser number of nodes. In such cases throughout is higher because the consensus algorithm is much efficient and does not require the need to produce a proof-of-work for validating any transaction.
Advanced frameworks like Corda, Stellar and DAG which are Distributed Ledger Technologies are some platforms that firms can leverage to build smart Blockchain solutions and resolve all the performance and scalability issues to the maximum. Moreover, these frameworks work on innovative validation and voting methods that reduce the delay in transactions greatly.
Key Takeaways
There can be various factors that affect the performance of your blockchain network. With the right selection of framework backed by the use of techniques like offloading large transactions from main transactions, improving consensus algorithms, and others, one can minimize many such risks. By following the right methods, organizations can realize higher throughout, less delays, and deal effectively with most of the performance and scalability issues.