Sharding is a topic that has received plenty of coverage and discussion in the cryptocurrency space. Technologically, it is nothing new, but applications such as the Casper protocol used for Ethereum have shown that it could be the solution to one of the biggest fundamental constraints of blockchain, which is the question of how to scale it for widespread adoption.

What is sharding?

The concept of sharding is a simple one. It is a way of partitioning databases into smaller components, or shards, that work faster and are less cumbersome to manage. When a business moves information relating to different customers onto different servers depending on where they are located in the world, that is a simple example of sharding in action.

When it comes to cryptocurrencies, however, sharding is a far more complex proposition because the very nature of blockchain requires all the nodes to carry all the data. This is the underlying concept that makes blockchain so secure, and guarantees that transactions between users or from one trading account to another are not compromised.

Proof of work and proof of stake

To understand how sharding can work on a blockchain, it is necessary to have a conceptual grip of Proof-of-Work (PoW) compared with Proof-of-Stake (POS). The former is where coins are mined in the conventional way using complex algorithms, while the latter is a simpler, deterministic method in which ownership is determined by wealth or the “stake.”  PoW has the advantage of almost bomb-proof security, while POS is thousands of time more efficient. And this is where sharding can come into its own.

Sharding and POS

Use of sharding in the POW environment is still being researched, but there are no easy answers. However, projects like Casper have shown that with POS it is another matter. When blockchains are required to verify large numbers of transactions, sharding will dramatically increase efficiency as every node is only required to carry a small portion of the data. As a result, scalability concerns are dramatically reduced.

Vitalik Buterin feels that sharding is the technology that will give Ethereum the edge over Bitcoin in the long term, and the FAQ document initially published by Ethereum on Github goes into more details of exactly how the sharded blockchain operates.

How effective is sharding?

There are still more questions than answers as to how big a difference sharding will ultimately make. Buterin has thrown around some impressive numbers, predicting that something in the order of one million transactions per second will be achievable.

Ethereum is not the only cryptocurrency that is exploring sharding options. Zilliqa ran some high profile tests earlier this year, in which it achieved 2,400 transactions per second, and this is certain to prompt others to join the race.

Time will tell whether Ethereum, Zilliqa or some as yet unknown cryptocurrency will ultimately become the leader in sharding. One thing is certain, however, the technology has a vital role to play in the widespread adoption of digital currencies.