- When the number of transactions initiated in a network exceeds its capacity to process them, the network is referred to as being congested
- Causes of Blockchain network congestion include market volatility and intrinsic characteristics such as block size and block time.
- For any new block to be added to the chain, users in each block must confirm the transaction, and each added block becomes permanent and immutable.
- The finality of transactions increases the number of confirmed blocks, adding pressure to the size of the Blockchain.
The world is moving towards a decentralized and more transparent future, with blockchain technology t the center of the transition. Through Blockchain, businesses have uncovered new possibilities, increased efficiency, and cost rationalization.
Among the key features of Blockchain that have made it quite an eventful venture include trustlessness, interoperability, decentralization, and providing a global reach. However, there is a crucial hindrance to the 100 percent success of the innovation; Blockchain network congestion.
What is Blockchain Network Congestion?
When the number of transactions initiated in a network exceeds its capacity to process them, the network is referred as being congested. Causes of Blockchain network congestion include market volatility and intrinsic characteristics such as block size and block time.
How does Blockchain network congestion happen
A blockchain is a chain of blocks. Each block contains transaction data initiated by users. For any new block to be added to the chain, users in each block must confirm the transaction, and each added block becomes permanent and immutable.
To understand how congestion can happen, key concepts play a critical role in Blockchain’s ability to process transactions.
Memory and Pool
Memory and pool (commonly called Mempool) is a collection of unconfirmed transactions in line to be included in a block. In other words, it works as a waiting room for transactions to be added to a block.
Candidate blocks/ Proposed blocks
Once miners or validators in a block have gone through the Memory and pool, they propose adding some of these transactions to the Blockchain. The proposed transactions are known as candidate blocks.
For a candidate block to become a confirmed block, it must undergo validation as per the Blockchain’s consensus mechanism, for example, Proof of Work in Bitcoin and Proof of Stake in Ethereum. When a block receives adequate attestations from the validators in the block, it is then referred to as a confirmed block. Confirmation of a block also follows the longest chain principle for validating transactions in a block. The longest chain principle stipulates that for a transaction to be valid, it must have the most computational work invested into it.
Once confirmed, the transaction cannot be changed or reversed. It is only then that the transaction is said to have achieved finality. The finality of transactions increases the number of confirmed blocks, adding pressure to the size of the Blockchain.
The above procedure brings us to the factors contributing to blockchain network congestion. The factors include:
Increased demand in the Blockchain
When more people initiate transactions to the Blockchain, unconfirmed transactions in the mempool can exceed the number of candidate blocks included in a single block.
Inadequate size of the block
A blockchain has a block size defining the maximum number of transactions a block can hold. If the number of transactions exceeds this limit, blockchain network congestion occurs.
Slow transaction validation time in a block
Block time refers to the time it takes to add a new block to the Blockchain. For example, Bitcoin adds a new block after every 10 minutes. If transactions’ initiation is much faster, it results in a backlog of transactions, consequently causing congestion.
Threats posed by Blockchain Network congestion
- · Delay in confirmation time.
- · Increased transaction fees- Validators often prefer to validate transactions with higher fees. In congestion, users usually bid higher transaction fees for validators to prioritize their transactions.
- · Poor user experience
What innovators can do to lessen blockchain Network congestion
- · Increase in block size- Increasing block size allows the processing of more transactions per block. However, larger blocks take longer to propagate through the network, increasing the risk of temporary folks. Larger blocks demand an increase in storage space, which increases decentralization
- · Decreasing block time- Decreasing block time allows the Blockchain to process transactions faster. However, a shorter time could potentially compromise security
Blockchain network congestion can, however, be solved through sharding. Sharding involves splitting the Blockchain into several smaller blocks, each capable of individually processing transactions and smart contracts.