On The Scalability of Blockchain Systems

Abstract

Blockchain, as a promising solution to develop secure distributed ledgers, has drawn a huge attention over the last decade. By introducing a pseudonymous payment model with no central authority, blockchain marked the new generation of online payment systems, known as Cryptocurrencies. For most of the existing cryptocurrencies, scalability has become a challenging problem. When dealing with an ever increasing number of users, miners, and transactions, the technology is unable to scale and provide the same performance as centralised systems (e.g. centralised payment systems).Without addressing this fundamental scalability problem, such a promising technology may not be able to be adopted in mainstream. This paper provides an attempt to analyse the scalability of existing blockchain protocols and look at the major factors affecting scalability, namely throughput and latency. We also describe the HTNZ protocol, a new approach to improve the scalability of Satoshi Nakamoto’s model [1], validated by experimental results. HTNZ introduces two new components, namely, sideBlock and helper. SideBlock has a slightly different structure of block and increases the number of transactions that can be processed per each interval.