On The Scalability of Blockchain

Abstract

From the day of the concept of blockchain came into light by Nakamoto’s whitepaper in late 2008, cryptocurrencies kept growing in value and in the number of transactions. Due to the innovative utilization of P2P networks to implement aspects of a currency lifecycle from the moment of its minting to its transfer between consumers. Bitcoin provides an alternative to fiat currency with a cash-like transactions that are relatively instantaneous and non-refundable, meanwhile allowing real global transactions with the same speed of processing local ones. It offers a public transaction history, enabling trustless auditability, and it introduces many new and innovative use-cases such as smart property, micropayments, contracts, and escrow transactions for dispute mediation. However, the same features that make Bitcoin attractive for its end-users are also its main limitations. Its decentralized nature limits the number of transactions and the speed at which transactions can be performed and confirmed. The problem with the slow confirmations is compounded with the semantics of the confirmations which are not final, requiring multiple confirmations and further delaying acceptance of a transaction. In our thesis we start with giving and introduction to blockchain in general and its structure, go through the underlying consensus algorithms and overview the literature that addressed the scalability issues and the proposed solutions which some are already implemented and running and others under development with promising potentials.