Blockchain Scalability: State Channels, Sidechains & more...


This post is an excerpt from the book Token Economy, Shermin Voshmgir, 2019. One of the greatest challenges of a distributed consensus like "Proof-of-Work" is that it makes the network safe, but slow. This is due to the trade-off between all dominant attributes of blockchains: decentralization, security, and scalability. Scalability is a big issue when it comes to evaluating the feasibility of tokenized use cases and the future of a token economy. In order to allow for a high degree of decentralization in a public and global network, blocks in "Proof-of-Work" blockchains are limited in size and are created with some delay. This intentional process allows members of the network that are computationally weaker to participate, since larger blocks are harder to process and network latency would prohibit them from receiving blocks.

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