Ethereum Co-Founder Vitalik Buterin Weighs in on Blockchain Improvement & Scaling Issues

In a Taipei conference, Vitalik Buterin explains Ethereum's scalability problem and how he believes it can be solved through a concept known as "sharding".

Now that Bitcoin and Ethereum have gained ground and established themselves as the big hitters, they are beginning to experience the growing pains that all maturing technologies go through.

There now remains one question: How will they address the problem of scalability?

Vitalik Buterin, co-founder of Ethereum, has already thought of some solutions to Ethereum’s most pressing problems and laid them out when speaking at the BeyondBlock conference in Taipei.

In this segment, which was named “Ethereum 2.0”, Buterin spoke about the cumbersome process of improving upon the blockchain.

“There’s generally three major categories of problems that I just keep talking about every year… We have privacy, and blockchains are public ledgers… On the one hand, the fact that a blockchain is a public ledger is a good thing because it means you have lots of nodes verifying data. But on the other hand, blockchains are public ledgers, so you have nodes seeing data,” he said.

He added that this dichotomy makes compromise very difficult. Although having a public ledger ensures the integrity of data, it eliminates any privacy from the equation as every transaction is visible.

Buterin considers that this problem has already been partially solved by the Byzantium hard fork five weeks ago, which allows sophisticated encryption algorithms to make their way into the Ethereum ecosystem.

The other problems he mentioned were consensus safety and smart contract safety, both of which also have solutions underway in the form of the Casper protocol and Viper (a new programming language for smart contracts), respectively.

The biggest problem, however, seems to be scalability.

“Why is scalability so hard? I often talk about the ‘scalability trilemma’, where I say that blockchain systems have to trade off between different properties. And it’s very hard for them to have three things at the same time, where one of them is decentralization. The other is scalability, and the third is security,” Buterin said.

According to him, it’s very easy to have two of these, but developers will end up having to sacrifice one of them to some measure.

“For example, if you want only security and decentralization, then you just go for existing blockchains,” he said.

He then proceeded to list all the blockchains that exist today (including Ethereum and Bitcoin), which were developed with a focus on security and decentralization but suffer when it comes to scalability.

“The other thing you can do is you can go for decentralization and scalability at the cost of safety,” he added.

Buterin’s favored solution appears to be “sharding”, a practice in which only some of the nodes will process transactions from one particular block. 

This frees up the rest of the nodes in the network to process another block in parallel, speeding up the transaction volume while still maintaining the integrity of the chain as a whole. If done correctly, the compromise on decentralization and security would be minimal.

“We want to scale to thousands of transactions per second, on chain, without supernodes, master nodes, crazy server nodes, consortium chains, or any of that stuff. The core kind of model here is the concept of ‘sharding’, and the way that I generally describe [it] is that you could think of it as creating a blockchain where you have—let’s say—a hundred different universes. And each of these universes is a different account space. So, you can have an account in some ‘universe’, or you can have a contract in some universe, and you can even send a transaction in some universe. And if you send a transaction in [a] universe, it can only affect stuff in [that] universe,” he said while explaining the concept to his audience.

He added that there could be a kind of protocol to consolidate the transactions between these “universes”, but it wouldn’t be “as clean and convenient” as it would be if everything existed within one single universe.

In the day leading up to Buterin’s appearance at the BeyondBlock conference, the price of Ethereum shot up from $400 to a record-breaking $480. Today, it appears to be inching closer to the $500 milestone

It’s not clear whether the material discussed at this conference may have created the optimism necessary to boost demand for the cryptocurrency, but the concept of sharding itself might get rid of some of the limitations that both Ethereum and Bitcoin have been facing during their growth.