What Is Sharding in Cryptocurrency and How Does it Help to Blockchain Protocols?

Sharding is a solution to blockchain’s biggest problem- scalability.

Blockchain technology is revolutionary and has a wide range of applications. But, that doesn’t mean it is free from problems. Recently, the utilization of blockchain has remarkably grown. From processing financial transactions, supply chain management, and even healthcare database records, blockchain has proved its usefulness.

However, as the blockchain grows the workload becomes heavier too.  Thus, the blockchain network slows down due to the influx of incoming transactions. This is the issue of network latency. 

This is where scalability becomes a problem. Scalability in the crypto space refers to how a system, like a blockchain, can still efficiently and quickly operate despite increased demands. 

Now, let’s dive into how sharding supports and improves the blockchain network. Let’s start off with an explanation of the process of storing and processing data.

What Is Blockchain Sharding?

Blockchain sharding means the breakdown of blockchain data into small pieces of information. The shards don’t change anything in the blockchain. They all use the same kind of protocol while storing and processing information. 

These data fragments allow nodes to share unique data with each other. Shard sharing – the method of shards communicating with each other, makes data dispersion fast and efficient. It allows users to access and review records on the distributed ledger.

Behind the Scenes of the Blockchain Sharding Process

Nodes

The nodes in a blockchain manage all the transactions that occur in a network. These are autonomous units that keep and guard sensitive data. For example, account deposits and withdrawals as well as a copy of every transaction that happened.

Horizontal Partitioning

Databases are divided into rows – termed as horizontal partitioning. These rows are called shards. Furthermore, these rows are divided depending on their features. Consequently, a shard might be responsible for the transaction history of a specific wallet address.

On the other hand, they can be assigned tasks based on the kind of digital assets deposited there. 

The Importance of Sharding

Sharding Compresses Data

It is difficult for malicious users to attack the blockchain network if all nodes contain copies of transactions. Tampering the data or modifying transactions is a challenge because all the processed transactions are recorded and easily viewed by the participants.

It Helps Support the Increased Demand

Linear transactions cause network latency. In a linear model, all transactions need the validation of the whole network and this slows down the nodes. But with the breaking down of large amounts of data, the nodes receive their own specific tasks that they can execute at a faster time. 

Better Scalability

The benefits of sharding include increasing the scalability of a blockchain. With sharding, the nodes can process more amounts of data. The capability to complete transactions at a faster rate will be a gamechanger for fintech companies. 

Preserving Decentralization

When all nodes are occupied, not many of them will be available to preserve the security of the network. Sharding distributes the workload among the nodes and ensure that it maintains a decentralized nature. 

Top Issues of Sharding

Sharding sure sounds like a solution to a blockchain scalability’s problems but it still has problems.  Some users are concerned with the security risks that it entails. 

Collision

This refers to the possibility that one shard will take over another. When this happens, the shards lose the stored information. Another possibility is that corrupted shards will insert damaged data into the network. 

Corruption

There is a security risk that shards can become corrupted. When a hacker controls a set of shards or even just one chunk of fragmented data, they can launch a cyber attack. Hence, this will enable the hacker to enter counterfeit data in the blockchain. 

Companies that use Blockchain Sharding

Ethereum

First on the list is Ethereum. After the recent Merge, the consensus mechanism is now proof of stake. Furthermore, Ethereum 2.0 will start sharding in 2023.

Ethereum’s goal is for them to increase their storage capacity and data accessibility. Albeit, code execution is not part of its intended functions.

Ethereum has its Beacon Chain as the key part of its Ethereum 2.0 roadmap. They plan to roll out 64 new shard chains as part of Ethereum network’s merging of their Ethereum Mainnet with the Beacon Chain POS. The Beacon Chain will support its blockchain in many aspects such as proof of stake management, overseeing validator’s stakes, carrying out consensus policies and the distribution of incentives and penalties to validators. 

Polkadot

Polkadot uses sharding in a different context called Polkadot Parachain. They divide their blockchain network into heterogeneous shards that end up in numerous sub-blockchains. 

A heterogeneous shard has its own state-transition so that it can be applied to specific-use cases. These heterogeneous chunks of data belong to their own “homes”. So, because of their specialized nature, they can efficiently serve users. 

Final word

The process of dividing blockchain processes into manageable chunks will positively impact the performance of a network. Users can get transactions done at a faster rate without worrying about the safety of their private information.

After all, the inventors of cryptocurrency developed it for the people. Obviously, the advent of sharding will make cryptocurrency more accessible and applicable to more people. Hence, the lesser the problems encountered, the more that people can benefit from cryptocurrency and blockchain technology.