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The State of Sharding: Why So Many Blockchain Protocols Depend on It

If you know what cryptocurrency is and how it works then you should have an idea of how its financial data is recorded. Well-known cryptocurrencies such as Litecoin, Bitcoin, and Ethereum are all ‘mined' via the web, then stored and shared digitally. Unlike cash or credit, cryptocurrencies are largely unregulated and their value can fluctuate greatly. There is a lot of freedom in buying, selling, transferring and using cryptocurrencies, but no transactions are completely without privacy and security in mind. There may be stories about e-wallets being hacked and cryptocurrencies being stolen, but it is generally one of the most secure financial vehicles. Sharding is a newly developed concept that is being explored by various cryptocurrency experts; it may speed up transactions in a highly secure way.

Examining What It Takes to Complete Cryptocurrency Transactions on the Web

Each cryptocurrency has its own network server as well as its own protocol. For each person who completes a transaction, the network gets a bit more congested and bogged down, thus slowing the network down a bit. When cryptocurrencies like Bitcoin were first emerging, server stability and traffic weren't a big deal because there were not that many users. More people were logging into PayPal or even their online back accounts per day back then, so not much thought was given to scalability. In approximately one year, the world of digital currencies has gotten a lot of attention. That translates into more users and more time spent completing transactions.

How Secure Are Current Cryptocurrency Transfer Security Measures?

At present, the systems and methods used to transfer cryptocurrencies are quite secure. Various regulated markets are taking a closer look at cryptocurrencies and their potential, including the NASDAQ. It's too early to say whether people will one day be trading cryptocurrencies as they do stocks and bonds, but it is very clear what the general public wants - and that is an integrated system that guarantees the safety of their digital cryptocurrency transactions. Right now, the only point when a cryptocurrency transaction is ever at risk is when it comes time to transfer or store money, such as moving cryptocurrency from a main account to an e-wallet or when users decide to trade Litecoin for Bitcoin. This is where sharding could make the whole system much more streamlined.

Where Does Blockchain Protocol Come in?

Each cryptocurrency transaction is recorded on the blockchain to basically make it impossible for people to ‘crack' the code. Blockchain technology is what makes each transaction unique so that users can't just generate cryptocurrency by replicating code or being able to use programs to generate cryptocurrency at random. You can access daily updated tracking for various cryptocurrencies to stay informed. The value of each cryptocurrency changes regularly, so it is smart to constantly be aware of how much value you hold. Sharding would, theoretically, be able to preserve blockchain technology while also lightening the load on cryptocurrency servers. By utilizing peer-to-peer networks, cryptocurrency transactions would remain secure but just be moved along more rapidly.

Is Sharding a Practical Solution?

On the surface, it does look like sharding could be the big break in cryptocurrency technology that everyone needs. Since there are millions of people online making separate transactions, why not connect them all within peer-to-peer based networks to get everything done a little faster? The theory itself looks good but more testing is necessary. Ultimately, hackers are going to look for and take advantage of whatever vulnerabilities they can find. There is also a big risk of networks being completely taken over or portions of them becoming frozen as a result of security issues. So, cryptocurrencies would need to vigilant about access as well as stability.

Sharding may or may not be the ultimate peer-based solution for completing cryptocurrency transactions in a secure way, but the method does seem to have lots of potential. There are security concerns that have to be addressed but the fact of the matter is that cryptocurrency is ultimately a peer-based system. Mining wouldn't be possible without the cooperation of users sharing resources and information. Cryptocurrency itself wouldn't have the value it has today unless peers worked cooperatively via shared networks.

In order to ensure that cryptocurrency transactions take place swiftly and securely, the answer seems to rest with sharding. Undoubtedly, more will be learned about this potential solution in the coming months. For now, be aware of how you complete cryptocurrency transactions, cautious about where you store it and check each of your transactions to ensure that they are completed without delay.

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Published Monday, February 11, 2019 9:54 AM by David Marshall
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