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Sharding allows breaking down data when systems become overloaded due to processing large volumes of data to make it more accessible.

When query volume grows, the load on the system can become exhausting. Sharding, in a sense, uses the same concept of decentralization that is the foundation of the blockchain ecosystem. Blockchain means dividing the activity between many different computers, providing many advantages of decentralization that have made it so popular already. Sharding allows breaking down storage facilities used in blockchain into smaller parts called shards.  

That means easier and faster data processing, help with bottlenecks and potentially prevention transaction overload scenarios (here, here and here) recorded in December, 2017, which illustrated just how much of an issue scalability can be for the crypto market.

Bitcoin and cryptocurrencies, in general, can be used as a storage place for wealth, which is something that banks have been used for centuries.  Still, if it is to become used widely day-to-day and become capable of going toe to toe with the financial services industry, it needs to process more than 7 transactions per second (compared to the proverbial 56 000 TPS Visa is capable of dealing with at periods of peak activity).

How does it work?

Blockchain works by synchronizing the public ledger on a variety of computers across the globe, which means having to deal with large volumes of data. For example, a sharding scheme in Ethereum can put all addresses starting with 0x00 into one shard, all addresses starting with 0x01 into another shard, etc.

Sharding is a process of dividing large chunks of data into smaller, more sizeable parts that can be managed easier. This is especially useful when it comes to blockchain data, which is famous for its epic volumes and much demand for greater speed of operations. Because all the backlog of transactions needs to be addressed before new transactions can be confirmed, the speed is what suffers at the expense of security.

What is it for?

Scalability has always been the weak point of blockchain. For Satoshi Nakamoto’s vision to come true, meaning for Bitcoin to become widely adopted by the masses, it needs to provide functions that are superior to those of the existing financial institutions.

Unless something is done about the issue, Bitcoin faces threats from competitors like IOTA who are currently capable of processing up to 800 TPS.

However, sharding means sacrificing some security for scalability as shards could be easier to take over than the whole network where all transactions are dealt with. The concerns here lie with communication between shards, which is thought to be somewhat expensive and difficult to implement.

Currencies with avid focus on sharding

Ethereum is famous for working actively on sharding in order to combat progressive overload, which is the result of Ethereum’s growing popularity. Vitalik Buterin offered a procedure earlier which would allow linking the main net to the chain nets and introduce cross-linking to reduce speed.

Singapore-based Zilliqa claims to be “the first public, permissionless blockchain to implement the technology of sharding.” Forbes notes Zilliqa’s 567% return rate  in 2018 and describes Zilliqa as “a hyper-efficient, scalable blockchain platform based on sharding, a concept NUS researchers developed at the university”.