Today we are going to be talking about one of the three Ethereum scalability solutions called Plasma.
Why does Ethereum Scaling Matter?
Ethereum is a cryptocurrency like bitcoin which currently has a capacity to make 13 transfers per second. This is a grossly inadequate capacity, especially considering Visa currently processes transactions at a rate of about 20k per second. Thus, if a cryptocurrency like ethereum is to replace visa and act as digital cash, it needs to scale up its capacity. The improvements to ethereum which help increase that 13 txn/s limit are called scalability solutions.
So today we are going to be talking about one of these proposed solutions called Plasma. When you think of plasma, an image of one of those electric plasma balls from a child’s science museum might pop into your head. Unfortunately, the Plasma we are talking about today is nowhere near as cool as those things, but I digress.
What is Plasma?
For you to fully understand what Plasma is, you first have to understand what a blockchain is. This is a rather complex topic, and I have more in-depth videos which I will link to here:
Blockchain explained:
https://youtu.be/_kSG-GSdG6k
But for now, here is the gist of it. When you submit a transaction, it is verified by some computers, then added to the blockchain. This blockchain is a series of blocks which is stored on a bunch of computers all around the world. Each block contains a certain number of transactions, and once added to the chain, a block cannot be changed. This whole process occurs whenever you want to send money using any cryptocurrency. Unfortunately, for a cryptocurrency like Ethereum, there is only one blockchain. So, for every transaction, the entire network of computers has to agree that that transaction took place. Because of this, Ethereum can only transact at a rate of 13 txn/s. But this is all going to change when Plasma is released. What if there were two blockchains, or ten blockchains, or one hundred? Theoretically, this would allow for a 2x, 10x, or 100x capacity respectively. This is essentially what Plasma is trying to do.
Instead of one central blockchain, which is what we have now. Blockchains would be able to split into two children. These two children would communicate with the original blockchain, so the children could be merged into one central chain. These two children could then be split again into a total of four children. This would allow for potentially four times more capacity so 52 txn/s. With just 11 splits, that is 2048 chains or a cumulative capacity of 26k tnx/s. Which is enough to handle visa payments worldwide. So that is how Ethereum could have theoretically infinite scaling with Plasma.
Current Plasma Limitations:
Plasma is still under development and there is no public release date yet. In the meantime, other companies and groups of programmers are working on other scalability solutions. One of the unsolved problems with Plasma is merging the children in an efficient manner. If you have two fast child blockchains, but they are unable to communicate with each other, Plasma is essentially useless. So, one problem Plasma developers are working on now is making that merging possible and efficient.
The second, and even bigger problem with Plasma has to do with how transactions are verified. In the beginning of this video I talked about computers around the world agreeing that a transaction took place. Right now, this occurs through the use of a system called Proof of work. You may have heard of someone who is mining bitcoin with a computer. The computers this person is using to mine bitcoin have a massive amount of graphics cards and essentially solve math problems all day. When these computers solve this problem, they add a transaction to the blockchain. But what happens when someone owns a majority of the computers mining a coin? This is called the 51% attack, and it allows someone to forge transactions. This has never successfully been done, as these computers are expensive, so it is essentially not cost effective to attack a cryptocurrency this way. When you split a blockchain however, you also split the number of machines working on verifying the transactions…
Proof of Work vs Proof of Stake:
https://youtu.be/5x1X_mdo2mY
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