The Scale-out Path

There are roughly two approaches to the scale-out path:

The first approach promoted by those in the decentralized blockchain camp adopted methods of relaxing protocol parameters to achieve higher throughput while trying to minimize the impact of weakening protocol integrity (security) – i.e., various Bitcoin forks increased block size (strictly speaking the original Bitcoin implementation isn’t too obsessed with setting a limit to block size), which is still within the security boundary of the Bitcoin protocol; some Bitcoin clones called altcoins significantly reduced block producing interval (or latency) to increase throughput, such method ventured outside of the strict Bitcoin security boundary, and is considered less secure compared to the block size increase approach.

The second approach ditched the whole Bitcoin-like probabilistic fork-prevention algorithms to adopt a more traditional distributed computing flavor design, e.g., DPOS¹¹ family blockchain

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¹⁰ As of late 2021, the whole blockchain sector is estimated to be 3 trillion USD in size (among which Bitcoin alone is around 1 trillion USD), making it the fifth largest economy in the world.

¹¹ Delegated Proof-of-Stake.

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projects. Some of such designs had been criticized to be more centralized¹², breaking the fundamental axioms of decentralized blockchain. To be fair there are projects in this camp that have very elegant math-theoretical designs, but nonetheless those protocols haven’t been critically tested in the wild with a scale like Bitcoin or Ethereum.

One shared limitation of the scale-out path is that it is rigid – the achieved throughput goal of a blockchain, either theoretical or practical, has a hard limit within certain technological condition (e.g., typical network bandwidth of a certain telecommunication stack of a historical era). When that limit is reached, the economy of that blockchain can’t grow anymore. The scale-out path doesn’t provide mechanism for alternative data wrangling to allow differentiated data scalability (it is also called per functionality scaling which is available to the scale-up path).

It could be argued that real economy also has a limit for growth – the difference is that, real economy could develop less resource-heavy human economic activities (behaviors) when certain natural resource utilization reached a limit – on the other hand, blockchain economy’s on-chain throughput limit is the hard limit for on-chain functionality, which is unfortunately the hard limit for human activities/behaviors, such is the characteristic of decentralized blockchain.

We have discussed earlier that the scale-out path suits centralized distributed system/network very well but is fundamentally at odds with blockchain’s decentralization axioms, especially the economic incentive part. It should be regarded as essentially a dead end path to solve the blockchain scalability problem (and lift the curse).