While the term “scalability” has often been used to refer to a blockchain’s capacity to process transactions, there is a movement to redefine scalability as a blockchain’s throughput divided by the cost to verify the chain.
“Scalability” can be defined as a blockchain’s throughput divided by the cost to validate all transactions (source: Celestia)
- To be a bit more specific, while horizontal scaling tends to increase the trust or security of a network, it generally results in the overall performance (transaction processing capacity) of the system being degraded.
- On the other hand, vertical scaling generally means making each internal component of a system faster and stronger. This, from the standpoint of a distributed ledger-based system, implies the use of supercomputer nodes. However, the downside to all this is that only a selected few individuals are capable of running such nodes.
- Vertical scaling is done by improving the efficiency of each individual transaction, whereas horizontal scaling is achieved through increasing the platform’s overall throughput capacity.
- It is all about centralization vs. decentralization.
- For blockchain platforms, the scalability of a given chain often boils down to the level of decentralization possessed by the network. Highly decentralized ecosystems (such as Bitcoin) are quite slow, whereas networks that are more centralized (like EOS, with its 21 Block Producers) are much faster.
- Therefore, having fewer nodes producing blocks generally makes things faster. However, centralization reduces the interesting properties that blockchains innately possess — namely their resistance to censorship, transparency and overall immutability.